What Is ChexSystems And Why Do Banks Use It?
ChexSystems Inc. is a reporting agency that provides a continually updated deposit account verification service to its members, which are banks, credit unions, and other financial institutions (there are few banks that do not use ChexSystems). This network of financial institutions all contribute information to the company concerning negative information on checking and savings accounts. This information is then shared to assess the risk tied to prospective customers opening new accounts and to screen out applicants that they’d rather not have as clients. For instance, people who repeatedly write bad checks have their information recorded in ChexSystems, since the service helps the financial institutions to be aware of fraud and other attempted abuses of the system. Viewed from this angle, it’s a very useful service. Yet it is entirely possible to end up in ChexSystems without engaging in criminal activities. If you had a checking account that was overdrawn and failed to pay the negati
