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    What is ChexSystems and How Does It Report on Checking Account Activity?

    Lakisha DavisBy Lakisha DavisJanuary 16, 2025Updated:January 16, 2025
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    What is ChexSystems and How Does It Report on Checking Account Activity?
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    Before you’ll be approved for a checking or savings account with a bank, they need to understand the risk you pose as an account holder. If you have a history of overdrafts, unpaid fees or suspected fraud, a bank may choose to deny you from opening an account. Just like a lender can check your credit history before approving a loan, a bank can check a report from ChexSystems before approving you for a bank account.

    Let’s explore what ChexSystems is, how it works, and what you can do to repair your financial health if you’ve been denied an account using financial tools like a second chance checking account or a prepaid debit card.

    What is ChexSystems?

    ChexSystems is a consumer reporting agency that collects banking history and other information about consumers, helping banks assess their risk before allowing you to open a new account. ChexSystems reviews activity from both checking and savings accounts to provide an accurate, holistic picture of your banking behavior in a report.

    Banking institutions and credit unions can use the report produced by ChexSystems to determine your eligibility to open new accounts.

    What account activities show up on your ChexSystems report?

    Several types of account and banking activities could show up on a ChexSystems report, including:

    • Applications to open new accounts
    • Account openings and closures
    • Check-writing history, records of check orders and returned checks
    • Overdraft history
    • Records of inquiries made about you

    Is your credit score affected by ChexSystems?

    ChexSystems is primarily focused on checking and savings accounts and has no explicit impact on your credit score.

    While ChexSystems doesn’t directly influence your credit score, if you’ve been denied the chance to open an account due to their report, it might signal other red flags on your credit history. Since you can access your credit report from each of the three major credit reporting bureaus once every 12 months, it may make sense to review it alongside your ChexSystems report.

    How to get a ChexSystems report

    You are entitled to access the ChexSystems report, called a Consumer Disclosure report, for free once every 12 months, thanks to the Fair Credit Reporting Act (FCRA), or if you’ve been denied a checking or savings account as a result of the information in your report.

    The first step to resolve any account denials caused by a ChexSystems report is to request a copy of the report. Once you receive a copy, you can review the information for accuracy and get a better understanding of the issues that may have flagged you as a higher-risk account holder.

    If there is inaccurate information on the disclosure, you can dispute it, which will trigger an investigation that is usually complete within 30 days, depending on your state of residence and when information is provided to the company.

    Rebuilding your banking record

    While it may feel like a hassle to restore your financial standing, it’s possible to get back on track and improve your banking record over time. ChexSystems reports can remain on your record for up to five years, but while that time passes, you can take steps to manage money in a more productive way.

    Second chance checking account

    If you’re not approved to open a standard bank account, you could still be eligible for a second chance checking account. Banks that offer this account type typically don’t review your ChexSystems report; however, if you open the second chance account, they’ll report your ongoing activity, which can help improve the report history.

    Second chance checking accounts may come with low minimum balance requirements or reduced account maintenance fees, allowing you to rebuild your banking history gradually. Check with the bank before you apply to confirm which restrictions and fees are relevant.

    Prepaid debit card

    While a prepaid debit card does not help improve your banking history, it could help you access and spend cash without a bank account. A prepaid debit card, similar to a gift card, can be loaded with money in advance and allows you to spend that money.

    Prepaid debit cards don’t require an active account to function. They have a built-in limit, since the amount available is what you’ve added to the card, and you typically can’t spend more than you have. Although it won’t impact your banking history, a prepaid debit card can be a useful tool for managing your money.

    The bottom line

    A ChexSystems report that shows a negative banking history may cause a bank to deny you an account. If a ChexSystems report has led banks to deny you an account, consider a second chance checking account and be sure to work toward developing healthier financial habits.

    Disclaimer: Article content is intended for information only. It may not reflect the publisher nor employees’ views. Consult a financial professional before making financial decisions. Publishers or platforms may be compensated for access to third party websites.

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    Lakisha Davis

      Lakisha Davis is a tech enthusiast with a passion for innovation and digital transformation. With her extensive knowledge in software development and a keen interest in emerging tech trends, Lakisha strives to make technology accessible and understandable to everyone.

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