EWS, ChexSystems and Telecheck are all credit scoring companies, which means they operate under the credit-score-company laws in the US. However, they do not handle your credit rating; they handle your banking history. The EWS, ChexSystems and Telecheck companies are used by other companies and banks. They use Telecheck, ChexSystems, and EWS to decide if you are a viable customer.
What Do These Credit Scoring Companies Do?
Once again, they are credit-scoring companies, but they do not handle your credit rating. They keep a check on your banking history. EWS, ChexSystems and Telecheck receive information from banks and other companies relating to how you manage your accounts.
EWS, ChexSystems and Telecheck generate a report on how you manage your accounts and your money, which they pass on to companies and banks as per their request.
For example, if you bounce a check, then the company that put through the bounced check may inform EWS, ChexSystems and Telecheck (or all three), and that incident becomes a blemish on your profile/report.
For example, you may overdraw within your bank account. Your bank will inform EWS, ChexSystems and Telecheck (probably all three if it is a big bank), and that becomes a blemish on your profile/report.
What Is The Difference Between Your Bank History And Credit Rating?
It is quite possible for a person to have a great banking history, but a terrible credit rating. For example, if you managed your bank account very well, but had a lot of catalogue ordering debt that you kept missing payments on, then your banking history would be fine, but your credit rating would be a mess.
It is also quite possible for you to have a great credit rating, but have a terrible banking history. For example, if you frequently used your credit cards and repaid the balances every month, then you would probably have a reasonable credit rating. However, if you had a habit of losing your checkbook and frequently had to have a freeze or hold put on your account while you look for it, then you could have a bad banking history.
Your banking history, as reported by EWS, ChexSystems and Telecheck, depends on certain companies informing EWS, ChexSystems and Telecheck of your actions. Your credit rating is based on certain companies informing other credit scoring companies (not EWS, ChexSystems and Telecheck). For example, the catalog* company would inform a credit-scoring company that deals with your credit rating, but they wouldn’t contact EWS, ChexSystems and Telecheck because catalog-ordering debt has nothing to do with your banking or checking accounts.
* Apologies for using a catalog company as an example. Catalogs are what people used to use in the olden days when modems still made noises. Catalogs came through the post, you ordered stuff, and then moved house before the company could find you. (giggle).
Is Your Bank History And Credit Rating Linked?
Yes and no. They are not linked in that EWS, ChexSystems and Telecheck have no interest in your credit rating. They are linked because many of the companies that use credit-rating companies are also using bank history companies.
For example, if you overdraw on your bank account, your bank will inform bank history companies and credit rating companies. It will appear as a blemish on your EWS, ChexSystems and Telecheck reports, and on your credit rating too.
When you overdraw, bounce checks, or mishandle your accounts, different companies are informed. A credit rating company may be informed, a banking history company may be informed, or both. There are second-chance bank accounts and credit union accounts that use credit history companies, and they report to them, but they still give you an account, even if you have a history or mishandling your accounts.
Which Companies Will Be Informed If You Mishandle Your Account?
There is no way of telling which companies will be informed of what. Here is an example of what happens when you overdraw past your agreed overdraft. In the example, the credit-rating companies are Standard & Poor’s (S&P), Moody’s, and Fitch Group.
Reports you to Telecheck, S&P, Moody & Fitch
Reports you to Telecheck, ChexSystems, EWS, S&P, Moody & Fitch.
Reports you to Telecheck and ChexSystems.
Why do banks and companies differ? Why would one company or bank report you to all credit-scoring companies, and yet others do not.
The reasons are all based on company policy. For example, in the case of bank 3 in the example, they may feel that overdrawing past your agreed overdraft if bank account mishandling and has nothing to do with your credit score. They may also only use Telecheck and ChexSystems, so they only report to them and not EWS.
There are some companies that do not use any credit scoring company, which means they do not report you to any company if you mishandle your account, bounce a check, or overdraw.
In the example, bank 1 only uses TeleCheck to check up on its new customer’s banking history, so they only report to TeleCheck when one of their accounts is mishandled.
What Applicable Laws Apply To EWS, ChexSystems and Telecheck?
As stated, EWS, ChexSystems and Telecheck are credit-scoring companies, but they do not handle your credit rating. There are laws that apply to all credit-scoring companies, but there are only two you need concern yourself with.
Law 1 – You are entitled to a free report every year
If you make the request to Telecheck, ChexSystems, or EWS, they are legally obliged to send you a free report either through the post or via email. They may tell you that they have nothing on you and that your report is blemish free, but you are still entitled to a free report.
Law 2 – You are entitled to a free report if you are denied a business transaction
If you are denied a business transaction, then whichever bank history company was used is legally obliged to send you a free report. For example, if a store wouldn’t accept a check from you because of an EWS report, then you are entitled to the same report that the store had sent to them. You will need the transaction number of some form of identifier, so you may show the credit scoring company you were denied a transaction. At which point, they are legally obliged to send you a free report showing you what the store saw.
What If I Have Money In My Account?
It doesn’t matter, and this is a point that many online users simply cannot understand. If you have $100,000 in your account, then EWS, ChexSystems and Telecheck may still deny your check at Wal-Mart when you are spending $8.
It doesn’t make sense right? Well, actually it does. The EWS, ChexSystems and Telecheck credit scoring companies do not judge you on the amount of money you have in your account. They judge you on the way you have handled your account in the past. They also judge you on other risk factors, especially when it comes to fraud indicators. After all, what difference does it make if you have $100,000 in your bank if you frequently draw out sums of $100,001?
The customer service departments at EWS, ChexSystems and Telecheck often hear, “My check was denied because of you, and yet I had $X amount in my account.” The customer support staff’s most common reply to that statement is, “Then why didn’t you pay with cash or your debit card?” Take note, even if you “Always” have a large balance stored in your account, one or all of the credit scoring (bank history) companies may deny your check or deny you the chance to open an account with a company or bank.
What’s With All The Scams?
There are several scams going around that relate to the credit history companies. For starters, if you have people knocking on your door or contacting you about debt you owe to Telecheck, ChexSystems, or EWS, then it is a scam because they do not collect debts.
There are companies that claim you can pay to have blemishes removed from your credit/bank history reports. They are scammers. The best-case scenario is that they file a dispute in your name and have a blemish removed. The worst-case scenario is that they run off with your money while claiming they tried to fix your account. Some will even say your account will be clear–in 7 years, which is how long it takes for your blemishes to disappear naturally.
Any company that claims they can remove blemishes from your reports are lying to you or ripping you off. You can personally file a dispute with Telecheck, ChexSystems, or EWS for free. You do not have to pay to file a dispute. If you see something on your report that you think is unfair, you are able to file a dispute without paying and get the blemishes removed yourself. You do not have to pay a company or another person to have your blemishes removed.
For more information, try our articles:
- How to Beat TeleCheck
- How to Beat the EWS (Early Warning System)
- Blacklisted By ChexSystems — Here’s What to Know (and Do)