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What is ChexSystems and How Does it Affect You?

Are you worried that past financial mistakes are impacting your ability to manage your personal finances effectively? Learn how ChexSystems, Inc. gathers and reports your banking history and provides suggestions for overcoming negative or inaccurate information.

What is ChexSystems and How Does it Affect You?

When you apply to open a new checking or savings account, the bank or credit union will likely review your banking history through ChexSystems, a consumer reporting agency under the Fair Credit Reporting Act (FCRA). You must understand the information in a ChexSystems report to help make informed decisions about managing your financial health. Negative items or a less-than-stellar report could impact your ability to open a new bank account.

What is ChexSystems?

The three major credit bureaus – Equifax, Experian, and TransUnion – collect and track data about your credit history to create your credit report and credit score used by lenders to determine your creditworthiness. ChexSystems is another consumer reporting agency, but while the credit reporting agencies track credit history, ChexSystems tracks your banking history to determine your banking risk. Financial institutions then use the information to assess whether to add you as one of their customers or members.

How Does ChexSystems Work?

ChexSystems collects individuals’ information from financial institutions regarding closed checking and savings accounts. Those issues will be included if you have had banking issues in the past.

When you submit an account application, the bank submits an inquiry to ChexSystems requesting your report and risk score. The credit union or bank then evaluates the information to determine your financial risk and whether to open the requested account.

Retailers can also obtain the report and review a customer’s history of bad checks to determine whether to accept a check for payment.

Information on ChexSystems Reports

ChexSystems reports include the following information:

  • Account closures and inquiries
  • Bounced checks
  • Identity theft security alerts
  • Overdrafts
  • Suspected fraudulent activity
  • Unpaid overdraft fees
  • Unpaid negative balances

See a sample consumer disclosure report from ChexSystems.

Not every financial institution uses ChexSystems, but many credit unions, including TDECU, and banks do.

How Can ChexSystems Impact You?

A negative ChexSystems report can cause the following:

  • Denied checks
  • Difficulty qualifying for a credit card
  • Difficulty opening a new bank account
  • Higher banking fees
  • Limited access to automatic bill payment or overdraft protection

In other words, a poor report can limit your access to basic financial services such as direct deposit, check-writing, or overdraft protection.

Review Your ChexSystems Report

Reviewing your ChexSystems report, especially if you are struggling to open a deposit account is a good idea. Request a free copy of your ChexSystems report on the ChexSystems website by providing the requested personal information, including your social security number, date of birth, and phone number.

The report may contain errors, and it could alert you to any unauthorized accounts opened in your name. Contact ChexSystems to dispute or report any issues. ChexSystems has 30 days to investigate and send you its formal response. If favorable, the item in question will be deleted from your record.

If you have unpaid fees, pay them off to remove them from your record.

ChexSystems retains information for five years, so it will be removed over time if you cannot resolve everything. You can clear your record and improve your financial outlook with time and persistence.

Turn Your Finances Around with TDECU

TDECU can often overlook your past financial mistakes and help you regain your financial footing. As the name implies, our Restart Checking Accounts allow customers a second chance and a fresh start.

TDECU Restart Checking Account Holders have access to our services, including:

  • Visa® debit card
  • Courtesy Pay (overdraft protection) – optional ($200 protection after 60 days)
  • Access to 55,000+ surcharge-free ATMs
  • Free Online Banking & Bill Pay
  • Free 24/7 access to Member Care

Contact us today for more options to help get your finances back on track, such as our secured credit cards and credit-builder loans.

Equal Housing Lender