If you’ve ever tried to open a new bank account and been denied, you’ve had a first-hand encounter with ‘ChexSystems.’
What is ChexSystems?
From the ChexSystems website: ‘The Chex Systems, Inc. network is comprised of member financial institutions that regularly contribute information on closed checking and savings accounts.’
You can read this big article for some good tips on fighting ChexSystems and some other options. If you are lazy and want to find the fastest solution, that being to actually apply online and open a bank account within a few days, even with ChexSystems problems, then just Apply for the BBVA Compass ClearChoice Free Checking Account. You’ll stand a good chance of getting this account, even with ChexSystems problems. And if they deny you, they’ll offer you their Second Chance account option which is called the BBVA Compass Easy Checking.
How ChexSystems Works
Just like credit FICO scores, ChexSystems gives you a rating between 100 and 899. The higher your rating, the better you are rated for banking. However, unlike the Credit Bureaus which keep records of both positive AND negative credit history, ChexSystems (and the reports banks look at) only contain NEGATIVE information.
Some notes about ChexSystems:
- You can request your score from ChexSystems by mail (it costs $10.50 by check) — this is an alternative to waiting for the 1 year free report if you need your report right away
- You are entitled to one free ChexSystems Report per year (this is different than the pay request above)
- ChexSystems reports ONLY contain negative information — no positive banking behaviors are recorded
- ChexSystems is a reporting agency — they don’t determine whether you can open a bank account or not, only the financial institution itself makes this choice (using your ChexSystems report to decide)
- Records stay in your ChexSystems report for five years, UNLESS the financial institution that flagged you for something requests removal of it
- If you notice erroneous data or out of date information in your report, you can dispute it with ChexSystems
What’s Included in a ChexSystem Report
The ChexSystems Report is entirely negative — no positive history is recorded. As much as you won’t want to look at it, you should so you know where you stand with banks and have an idea about any potential problems you may have.
Here is what the ChexSystems Report Looks like:
The ChexSystems Report will contain this information:
- Records of unpaid banking fees (overdraft fees)
- Records of bounced checks
- Records of any suspected fraudulent activity
- Records of credit inquiries
- Records of check orders
How to Avoid Getting on ChexSystems
The best way is to practice good financial habits (see our article about how to avoid getting on ChexSystems).Keep your nose clean when it comes to banking.
- keep all payments up to date
- if you accrue overdraft fees, pay them off
- keep your credit history in good order
- don’t let your bank account stay in a negative balance
- don’t write checks that bounce or make payments to your bank account that can’t cover the amount
What to Do If You Can’t Open a Bank Account Because of ChexSystems?
Fight / Dispute ChexSystems…
If you can’t open a bank account because of ChexSystems, here’s what to do to get your name out of the chexsystems records.
Note that this process may take a few weeks / few months, so if you need a bank account or bank service right away, you may need to look at the other options we list later on.
2) look for errors or out of date information (if there are errors, you can dispute them with ChexSystems)
3) find the banking institution/s that submitted the records, then contact them to reconcile the issue (usually involves paying the fees or fines you owe). If you do, they likely can get your record/s remove from ChexSystems
If you find yourself in the situation where you can’t get your ChexSystems records fixed…
You have three options here.
1) Find a banking institution that does not use ChexSystems.
Only 80 percent of the banks use ChexSystems. Find a Credit Union (some credit unions don’t use ChexSystems) or a bank that does not use chexystem (see our list of nonchexsystems banks).
I recommend you try starting out with BBVA Compass ClearChoice Free Checking. BBVA tends to ignore ChexSystems so you may be able to get a full checking account if you apply online. And if they deny you a regular checking account, BBVA will offer you their Second Chance account which is called the BBVA Compass Easy Checking. So this is your best bet if you don’t want to go through the trouble of disputing ChexSystems.
2) Plead with the bank manager to ignore ChexSystems
Talk to the bank manager at the institution that denied your account and plead with them. Managers often have authority to override policies towards clients regarding negative ChexSystems records. If you present your case nicely, there is a good chance you can still get a new bank account or your requested account privileges even with negative ChexSystems records, should the manager be accommodating.
3) Open a Second Chance Checking Account.
These Second Chance Checking Accounts are special bank or checking accounts offered by some banks/credit unions to clients with bad credit or banking history. I recommend apply for the BBVA ClearChoice Free Checking and if they deny you, you will be offered the BBVA Compass Easy Checking, which is a Second Chance Account.
Because you are a risk to the financial institution, they will often charge you higher monthly fees and impose additional restrictions on your usage.
The benefit of Second Chance Bank Accounts, however, is that in time with good banking behavior on your part, your Second Chance Account may be upgraded to the regular account after one or two years.
Read our Best Second Chance Accounts list for more second chance account recommendations.
Make sure you take a look at our other articles about ChexSystems
- Check out or comprehensive How to Open a Non ChexSystems Bank Account article
- Guide to Legit Non ChexSystems Banks – 2017 Edition
- Best Second Chance Accounts (2017 Edition)
- Check out our List of Banks That Don’t Use ChexSystems covering all 50 states. Somewhat outdated as of 2017, but give it a look and start calling the banks. You might find something.
- Check out How to Find Out if You Are in the ChexSystems Database
- Learn how to dispute your ChexSystems report
- View a Sample Dispute Letter
- Learn how to Open a Second Chance Checking Account for People who are in ChexSystems
- How to Get Out of EWS
- How to Get Out of Telecheck
- ChexSystems vs Telecheck vs EWS