What is ChexSystems?
ChexSystems is a service provided to banks by Deluxe Corporation. Their database keeps track of negative information regarding checking and savings accounts. Negative information usually consists of NSF (non-sufficient funds), which is also known as bouncing checks. Unpaid overdrafts are also a major contributor to the database. Minor mistake, major consequences Sometimes it doesn’t take much to land on ChexSystems’ list of naughty accountholders. A vocal critic of the agency says his former bank reported him to ChexSystems after an insurance company automatically debited $60 from a closed account. On the other end of the spectrum, ChexSystems alerts a bank when an account applicant furnishes a phony Social Security number or when the applicant has a history of fraudulent check-kiting schemes. Critics complain that financial institutions use ChexSystems indiscriminately, weeding out not only checking-account applicants who intend to commit fraud, but also law-abiding people who wrote a
Chexsystems verifies your checking activity and functions as a consumer credit reporting agency. Most banks and credit unions use it when opening a new deposit account. Because Chexsystems is a credit reporting agency, it is your right to dispute with chexsystems. Just as you can ask for one free credit report every year, you can also ask for a Free chexsystems report once a year. As a consumer, you can question any information in Chexsystems, and you can also dispute entries and the evidence that supports the reported activity. Chexsystems is not a fair system. Many have objected to its reporting practices, stating that the system does not report fairly, and unlike credit bureaus which have both positive and negative information on your credit report, Chexsystems only contains negative information. This jeopardizes your reputation as a consumer, when you would otherwise be qualified to open checking accounts. Another growing problem I am seeing is Early Warning Services More and more
I’ve had a number of people write me and tell me that they have been unable to open a checking account because of ChexSystems. I’ve decided to check it out for myself and it seems to be valuable information. How it works: U.S. banks and credit unions report incidents to ChexSystems to protect themselves and other banks in the future. You get reported to ChexSystems if your account is closed for “cause.” What is “for cause?” Banks differ greatly between them as to what valid reasons are for closing an account. Here are some examples: • The bank was unable to collect for an overdraft, ATM transaction, or automatic payment which they honored on insufficient funds.(Regardless of amount, and often without waiting more than a few days!) • Multiple overdrafts. • Savings account, debit card or ATM abuse. • Fraud. • Providing false information in opening account. Each incident stays on your record with ChexSystems for FIVE full years from the date the incident was reported. You are entitled to
Cheryl wrote a few bad checks her first year in college when she was 19. After some time she paid all the bank overdraft fees, and paid off the people who received those bounced checks. Her parents who were helping her insisted that she close the bank account . Three years later… she was about to graduated… a little more older, and a little more mature. She tried to open a new checking account. Every bank she applied to rejected her because she had a negative record on file with ChexSystems. This is a true story! Your personal story may be different… but this basic situation is very common and has happened to thousands of people… including members of our staff. What happen to Cheryl, and to you, was when you applied to open a checking account, the bank or credit union ran your name to make an inquiry through a database that will tell them if you have had: frequent account overdrafts… bounce checks… did something banks consider as an “act of fraud” or otherwise have an unpai
