You may not find out until you apply for a bank account and are denied. If this happens to you, request a free copy of your ChexSystems report , which you can do on an annual basis. Consumer Financial Protection Bureau. Checking Accounts. Building Credit. Your Privacy Rights. To change or withdraw your consent choices for Investopedia. At any time, you can update your settings through the "EU Privacy" link at the bottom of any page. These choices will be signaled globally to our partners and will not affect browsing data.
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What Is ChexSystems? How ChexSystems Works. Key Takeaways ChexSystems is a consumer credit reporting agency that collects information on closed deposit accounts at banks and credit unions. The type of activity that ChexSystems tracks is related to issues with deposit accounts, such as bounced checks.
Having a ChexSystems record could make it difficult to get approved for new bank accounts. ChexSystems only furnishes information; it does not actively approve or decline bank accounts. Article Sources. Investopedia requires writers to use primary sources to support their work. These include white papers, government data, original reporting, and interviews with industry experts. We also reference original research from other reputable publishers where appropriate.
You can learn more about the standards we follow in producing accurate, unbiased content in our editorial policy. Related Articles. Partner Links. A checking account is a highly liquid deposit account held at a financial institution that allows deposits and withdrawals. ChexSystems and your financial institution must research the dispute within 30 days.
If you're not satisfied, you can add a brief statement to your report explaining the problem. If your report is accurate and you owe money, pay it. If your budget is tight, ask your creditors if they'd be willing to settle for less than the debt amount.
He had racked up nonsufficient-funds fees in his checking account, which ended up getting closed. In Hughes' case, once he paid the agreed-upon amount, he received a receipt for payment and sent it to ChexSystems. If all else fails, wait until blemishes fall off your record. Reported information usually is removed from your ChexSystems file after five years. Until then, you might be able to open a second-chance checking account. These accounts are designed for people with bad credit or banking histories.
Find a bank for you among our list of second-chance checking accounts. Read about what banks charge for overdraft fees. These spending cards have some banking features such as direct deposits and multiple loading methods including cash loads and check deposits.
Steps 1. Request your report. Dispute errors. Pay off debts. Ask creditors to remove information. Wait until the record drops off the database.
Show More. Next: Second chance checking. Need a fresh start with your banking? Take a look at second chance checking accounts across the U. If there is no note, the bank has broken the law, and you are within your rights to file suit. Send a letter to the bank letting them know that you intend to sue within 30 days due to their failure to comply with the FCRA. Give them the option to delete all records of the debt and remove you from ChexSystems in order for you to drop the lawsuit.
In many cases, this simple step is all that is required to get the bank to remove the negative information so they can avoid being sued. Remember, you are not disputing whether or not you owe the debt at this point. You are only suing because the bank has failed to comply with federal law regarding fair credit reporting.
In most cases, the bank will settle, but you should win the suit even if they appear in court. The reason for this is because you have proof that they violated the FCRA by not complying with the regulations to place the notice on your ChexSystems record. The tips above focus on getting errors removed from your ChexSystems report or having negative items removed based on technicalities throughout the filing process. But even if everything is accurate and both ChexSystems and the bank or credit union responded to your requests for proof exactly as they should have, you can still work on rectifying your ChexSystems report.
If you owe money to any ChexSystems member institutions, do your best to get those paid off. You can even negotiate to pay less than what you owe. When negotiating the payoff process, ask the creditor to update the information in ChexSystems indicating that the debt has been paid.
As always, be sure to keep copies of all the paperwork documenting the payoff. As a last resort, remember that patience is key. All negative items on ChexSystems typically go away after five years. So even if you are in the ChexSystems database for the next few years, you can still access the financial tools you need to manage your money.
Lauren is a Crediful writer whose aim is to give readers the financial tools they need to reach their own goals in life. She has written on personal finance issues for over six years and holds a Bachelor's degree in Japanese from Georgetown University. Advertiser Disclosure Crediful is committed to helping you make smarter financial decisions by presenting you with the best information possible.
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