ChexSystems is a consumer reporting agency that tracks and maintains records of consumers’ banking history. Banks and credit unions use this information to assess potential customers’ risk of financial fraud or mismanagement.
They use this information to decide whether to open a checking or savings account for an individual or to deny an application.
How long does my information stay in ChexSystems?
The length of time information stays on your ChexSystems report can vary depending on several factors.
Factors that determine the length of time a report stays in ChexSystems:
- The type of information reported
- Whether the information is verified as accurate
- The actions taken by the consumer and the financial institution
According to the Fair Credit Reporting Act, certain negative information can remain on a ChexSystems or Early Warning Services (EWS) consumer report for up to seven years.
However, in most cases, negative data will stay on the report for a period of five years. After this time, it will be removed automatically.
How Long Negative Information Stays on a ChexSystems Report
Negative information, such as unpaid debts, negative balances, or account misuse, can stay on a ChexSystems report for up to five years.
Positive information, such as a history of responsible account management, can stay on a ChexSystems report indefinitely. This information can be used by financial institutions to assess an individual’s risk and can help to offset any concerns on the report.
How a Negative Report Can Affect Your Ability to Open a Bank Account
A negative report can cause a bank or credit union to deny an application for a new account, or to approve the application but with certain restrictions or higher fees.
A negative report may also cause a financial institution to close an existing account. This can make it difficult to manage your finances, pay bills, and access other financial services.
Alternative Banking Options
If you’re unable to open a new bank account due to a negative ChexSystems record, there are alternative banking options available, including:
- ChexSystems-free banking: Some banks don’t use ChexSystems or other consumer reporting agencies to evaluate potential customers. It’s worth inquiring with different banks to see if they use ChexSystems or other consumer reporting agencies.
- Credit unions that don’t use ChexSystems: There are also some credit unions that don’t use ChexSystems. Instead, they may use other methods to check an applicant’s banking behavior. This can include conducting a soft credit pull on your credit report. And, of course, some credit unions don’t use credit reporting agencies at all.
- Second chance checking accounts: Some banks or credit unions offer these second chance checking accounts that are specifically designed for people with a negative banking history. They may have additional fees or restrictions, but they can help to rebuild a positive banking history.
- Prepaid debit cards: These cards can be used like a traditional debit card, but the funds are prepaid rather than withdrawn from a bank account. This can be a suitable option for managing expenses and accessing cash.
- Check cashing services: These services allow you to cash checks, pay bills, and make purchases without a traditional bank account. However, these services typically charge high fees.
- Money order services: These services allow you to purchase money orders, which can be used like cash or checks. This can be a viable option for paying bills and making other payments.
- Online banks: Some online banks may have more lenient account opening guidelines. They may be willing to open a checking account for people who are in ChexSystems.
How to Remove Information from ChexSystems
If you find inaccurate or outdated information on your ChexSystems report, you are entitled to dispute the information and request that it be removed.
Dispute Process for Incorrect or Outdated Information
- Review your ChexSystems Consumer Disclosure Report for errors or outdated information.
- Gather any documentation or evidence that supports your dispute.
- Submit your dispute to ChexSystems in writing, including any supporting documentation.
- ChexSystems will investigate your dispute and notify you of the outcome.
Steps to Take to Improve Your ChexSystems Report
- Check your credit report regularly and dispute any errors or outdated information.
- Pay outstanding debts and work to resolve any negative information on your ChexSystems record.
- Manage your checking and savings accounts responsibly, and avoid account misuse or fraud.
- Keep your contact information up to date with ChexSystems and your financial institutions.
Keep in mind that removing incorrect or outdated information from your ChexSystems report can take time and may require persistence. However, taking the steps to improve your report can help increase your chances of being approved for a traditional bank account in the future.
