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What’s the Difference Between ChexSystems TeleCheck and EWS

All three of them are consumer-reporting companies. They help banks, stores and financial service organizations to weed out the good customers from the bad customers. They also help them identify fraud and people that are likely to commit fraud in the future. They do it by keeping a record of your banking history.

They also help them identify fraud and people that are likely to commit fraud in the future. They do it by keeping a record of your banking history.

Specifically, the consumer-reporting companies keep a check on the negative things within your banking history. They create a report based on your history and pass the reports on to the banks, stores and financial service organizations that request it.

What Does Your Report Contain?

It varies from one consumer reporting company to another, but they all give away a similar message. They are all trying to show how much of a risk you are.

The EWS (Early Warning Service) keeps a record of your negative account activity and presents that information in a simplified form to those that require it. If a bank doesn’t use ChexSystems, they may use EWS instead. EWS does include in their calculations, your credit score / credit history, unlike ChexSystems and TeleCheck which do not.

ChexSystems does a similar thing, but the information they give away is also summarized in a conclusion. ChexSystems is by far the most popular, most widely used database of the 3 — over 80% of the banks in the US use ChexSystems.

TeleCheck does a similar thing to EWS, but they also give away a risk score too. TeleCheck is less popular.

The consumer-reporting companies report on a variety of things, all of which relate to how you handle your bank accounts, your financial service accounts, your store accounts, and how you handle your checks. For example, if you overdraw on your bank account, they will put a blemish on your report that will make it more difficult for you to get new bank accounts in the future.

Did You Know?

ChexSystems actually uses EWS to build profiles on people. They have already stated that they use the service, but we have no way of knowing to what extent they use them. They may simply use the EWS service to build a profile when their current information is a little lacking. Or, they may use the EWS service to sure-up and bulk up their own databases.

All three consumer-reporting companies operate under the US laws for credit reporting companies, yet they do not define themselves as credit reporting companies because it causes confusion. They do not deal with your credit rating; they only deal with your banking, account and checking history.

The consumer-reporting companies do not actually seek out information (typically). All of their information comes from other financial service organizations and companies. For example, if you bounce a check with a company, and that company uses one of the three consumer-reporting companies, then they report it to the consumer-reporting company they use and it becomes a blemish on your future banking-history reports.

Clearing Up The Confusing Part

Many people are confused by a bank or company’s response to a report from ChexSystems. TeleCheck and EWS. They cannot understand how one store or bank will deny them an account, or deny their checks, and yet another store or bank will approve them. Here are two examples with explanations on the subsequent consumer confusion.

Example 1

One bank may decline your application to open a new account because of a report from one of the banking-history companies, and another bank may approve your application based on the very same banking-history report.

Example 2

One store may refuse permission for you to use a check based on a banking-history report, and another store may happily accept checks despite seeing the same reports.

So, what’s all that about?

The first element is company policy. The second element is which banking-history reports are being used.

Confusion ?!? – Company policy

In the examples, the banks and stores are seeing the same reports. They are using the same banking-history companies, so why are they making opposing decisions? The reason is company policy.

For example, in the year 2000, the Federal Reserve Bank of San Francisco changed their company policy. One of them was that they would disregard all entries that are older than 3 years, unless they involved fraud. If you have blemishes on your report that are 4 years old, then you may find that the Federal Reserve Bank of San Francisco gives you an account where other banks may not.

Confusion ?!? – Which banking-history reports are being used

In the examples, the banks/stores were seeing the same banking-history report, but this is not always the case. One bank or store may approve you because they used EWS instead of ChexSystems, or TeleCheck instead of EWS. Which reports are being used may affect if you are denied or approved.

Banks And Stores Also Have Company Policy Regarding Reporting

When you mishandle your accounts or checks either within a store or with your bank account, the bank or store reports it to a banking-history company. They may report it to one, two, or all three.

Banks and stores have their own policies on this too. For example, the Bank Of America will not report you to a banking-history company if you overdraw by less than $25. This means that if you have a slight slip with your finances, it will not affect your banking-history report.

Is There A Big Difference Between ChexSystems, TeleCheck and EWS?

Not really. EWS is the youngest and is the only one that is owned by banks. They all report on similar things and all have similar processes. They all operate under the same laws, which means you can get a free report every year. Plus, they all get their information from the companies that use them in a two-way sharing process.

The information that ChexSystems, TeleCheck and EWS hold is confidential and protected under the law, but there is not much that an identity thief can use to steal from you. That is why you rarely hear of cases where a data breach has led to somebody being ripped off. The information they hold is often more embarrassing than it is an identity-theft risk.

That is why you rarely hear of cases where a data breach has led to somebody being ripped off. The information they hold is often more embarrassing than it is an identity-theft risk.

Finally, there is a chance that all three have “Nothing” on you. If you have not mishandled your accounts, if you have not undertaken any form of financial misconduct, and if you have not been the victim of fraud, then there is a chance that all three have an empty file on you.

Some people are surprised when they call ChexSystems, TeleCheck or EWS and the customer advisor tells them that their file is empty–but most people have a completely empty (blemish free) profile with ChexSystems, TeleCheck and EWS.

What To Do IF You Have a Telecheck, EWS, or ChexSystems Record?

You can try to dispute your record to fix the problem. Or wait years for the records to be purged.

However, the best solution is to try applying online with a bank that does have a reputation for accepting customers with EWS or ChexSystems records.

We recommend trying to apply for the BBVA Compass ClearConnect Checking Account. They have a reputation for giving accounts to customers with bad banking history.

Need a Bank Account but have ChexSystems problems or Bad Credit?


Try opening a BBVA Compass Free Checking Account! BBVA is one of the more forgiving banks and may give you a full-fledged REGULAR bank account when you apply online...even with bad banking and credit history.

And if you don't qualify for the regular BBVA checking account for some reason, you'll then be given the option of opening the special BBVA Compass Easy Checking Account, an account designed specifically for those with banking problems.

...learn more about BBVA Second Chance Banking here


You can also see our list of Best Second Chance Accounts, which are accounts for people with EWS, Telecheck, or ChexSystems records.

About The Author

Ben Todd

Ben was a seriously broke graduate student with bad credit who after finding himself rejected for any sort of credit card or loan for most of his adult life, finally decided to get his financial life in order. ‘

He spent several years reading as many financial advice books and blogs as he could.

And suprisingly, Ben found he actually LIKED the topic of personal finance; after fixing his own finances, starting his own successful work at home website business, and using his earnings to get out of debt, created echeck.org to help others do likewise!

1 Comment

  1. pbcoleman

    There are actually specific differences in the these three credit reporting agencies.

    Telecheck – Approves point-of-sale checks. They guarantee payment if the check does not clear your bank, and then will attempt collection from you. They’ve had a practice of clearing you if you pay NSF checks and fees listed in their files.

    EWS – Is owned by several large banks, and maintains information on fraudulent banking activities; forged checks, check kiting, accounts with alleged fraudulent transactions. They serve as the “fraud watchdog”.

    Chexsystems – Maintains data on negative account activity. Banks send information to them for charged-off and closed accounts. They report negative information for 5 years (although the FCRA allows them to report for 7).

    They all sell consumer scoring modules, and all have to follow the FCRA, FDCPA and applicable state law for state-chartered banks.

    Reply

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