How do banks use ChexSystems?
When considering a new customer, the bank considers several factors. One consideration is the individual’s banking history. The bank looks for account abuse, such as whether the person has outstanding debt at other financial institutions. This is important because banks must take the loss when a person closes their account and doesn’t pay their outstanding debt. In addition to serving as a tool for financial institutions to determine the risk associated with a prospective customer, the ChexSystems database is a valuable tool in preventing identity theft and account fraud. Along with the other information maintained in the database, banks and credit unions can verify: • If the applicant’s Social Security number matches the ChexSystems data • How many accounts the applicant has applied for in the past 90 days • If the driver’s license number is accurate and issued to the applicant • The names of people reporting lost or stolen checks When a financial institution processes an account appl
