If your name appears in the ChexSystems database, you’ll have a considerable problem opening up a new bank account. The vast majority of banks pull a ChexSystems report prior to allowing consumers to open up new checking or savings accounts. These reports disappear from the system after five years, but you can dispute the accuracy of your banking record in order to get out of ChexSystems and free up your banking options.
Order a Free ChexSystems Report Online
The Fair and Accurate Credit Transactions Act (FACTA) of 2003 allows you to order a free credit report from TransUnion, Equifax and Experian once a year. What you may not realize is that, as a consumer reporting agency, federal law also requires ChexSystems to provide you with a free annual report upon request. You need to know exactly what your ChexSystems report contains before you can successfully contest the information.
If you’ve already requested a free credit report from the three major credit bureaus, this does not affect your eligibility for a free ChexSystems report. The law gives you the right to pull each of your reports annually, not just one or two.
Evaluate Your ChexSystems Record for Accuracy
The Fair Credit Reporting Act requires all creditors to report only accurate information to consumer reporting companies – this includes ChexSystems. Evaluate your report carefully for errors and ask yourself the following questions:
- Does the report contain the date of the supposed transgression and, if so, is that date accurate?
- Is the amount of the bank debt accurate?
- Is the scheduled removal date accurate?
- Is the account number for the bank debt accurate?
- Do I recognize this debt at all?
Remember, you have the right to dispute any information that reflects an inaccuracy. The U.S. Public Interest Research Group reports that 78% of consumer reports contain inaccurate information. Finding inaccuracies in your ChexSystems record shouldn’t be that difficult. Even if you don’t locate inaccurate information, you still have the right to force the bank to verify that its report is, in fact, correct. If it fails to do so, you can demand that the bank remove its report.
Dispute the Bank Debt Directly With ChexSystems
Send a letter to ChexSystems, along with a copy of your free consumer report that demonstrates the entry in question, and request an investigation into the debt. If the entry contains certain clear inaccuracies, you may mention these. However, its best to let your first dispute be a simple blanket dispute. If you wish, you can split hairs with ChexSystems later should your initial disputes not result in the removal of the negative information from your record.
ChexSystems has 30 days in which they must, under federal law, contact the bank that furnished the derogatory information and obtain validation that the account is being reported accurately. If the bank doesn’t respond, ChexSystems must remove the report.
Don’t panic if the bank verifies the information, as they usually will even if the data is inaccurate. The purpose here isn’t to actually procure an early removal but rather to create a paper trail demonstrating your efforts and put the bank in a position in which it has no choice but to remove the derogatory information or face a lawsuit.
Contest Your Bank Debt With the Original Creditor After the ChexSystems Dispute
After ChexSystems notifies you that the account is accurate, write your bank a letter notifying it that you discovered a debt recorded in your ChexSystems report and need the bank to investigate. Keep in mind that this process, while similar to the debt validation procedure often used to remove collection agency accounts from a credit report, is considerably different. Original creditors, such as banks, don’t typically have to validate your debts. They do, however, have to conduct an investigation if you dispute the validity of their reporting method.
The Bank Investigation
The bank has 30 days to investigate the debt for you. They must then provide you with the information they provided to ChexSystems when you originally disputed the debt. Because banks frequently change hands, records are often lost, destroyed or not properly stored. The likelihood that your bank will be able to come up with any proof of your debt during its investigation is slim. The older the bank debt is, the better off you are.
After 30 days, the bank must provide you with the results of its investigation. If there are no results, you have the right to file a lawsuit against your financial institution for verifying the accuracy of its report to ChexSystems when it lacked proper records of your original debt. Often, just the threat of a lawsuit is enough to spurn the bank into modifying its report – getting you out of ChexSystems early.