The Ultimate Guide to ChexSystems: What To Do If You Are Blacklisted
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.’
Basically, this is simply a fancy phrase for basically a network of all the major banks that submit the banking history (specifically, the NEGATIVE history) of individuals across the United States to an organization that manages this database of ‘bad client information.’
As of 2017, roughly about 80 percent of the banks and credit unions in the US use ChexSystems.
ChexSytems isn’t a problem for you. Unless, that is, you find yourself in the database.
You are probably at this post because you can’t open a bank account. That’s likely due to ChexSystems or Telecheck (or maybe EWS).
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 Free Checking Account. You’ll stand a good chance of getting this account, even with ChexSystems problems (BBVA does use EWS). And if they deny you, they’ll offer you their Second Chance account option which is called the BBVA Easy Checking.
Then it’s a problem because you won’t be able to open any new bank accounts with most banks and credit unions in the US. Additionally, if you have a negative ChexSystems report (note, they are ALL negative), you may be denied for additional banking privileges with your bank branch, even if you already have an existing account with them. This could mean being denied for overdraft protection, bank loans, denied the opening of secondary accounts, and denial of account upgrades.
How ChexSystems Works
You can basically think of ChexSystems report as the banking version of your FICO score. Just like the credit history agencies that track your credit history, ChexSystem monitors your banking behavior and makes this information available to financial institutions.
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.
This basically means that your ‘good’ behavior is not at all counted. Once you have your name in ChexSystems, you are treated negatively by banking institutions. If two people have committed some banking mistakes, but one of those persons has also had some good banking relationships, both of those people may be declined from opening a new banking account.
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.
This would include doing all of the following:
- 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
You should keep track of your financial history and know exactly how much money is going in and going out of your bank account/s. This can help you avoid overdrafts or accruing extra banking fees you didn’t calculate on.
If you do commit a banking mistake, and find out you are on ChexSystems, call ChexSystems right away and ask exactly what the situation is and what triggered you on their system. They will tell you what and why and you can take the steps to fix the issue.
If you do find yourself on ChexSystems because of bad banking at a banking institution, you can go back and pay what you owe to the bank. Unless you have a history of banking abuse, you should be able to reconcile with that bank and your information will (eventually) be removed from ChexSystems. Banking mistakes will stay on your ChexSystems report for up to five years. However, the financial institution that submitted a record to ChexSystems can request it’s removal — which is why if you reconcile with your bank you should be able to get your record removed from ChexSystems.
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 Free Checking. BBVA tends to ignore ChexSystems so you may be able to get a full checking account if you apply online (BBVA does use EWS). And if they deny you a regular checking account, BBVA will offer you their Second Chance account which is called the BBVA 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 Free Checking and if they deny you, you will be offered the BBVA 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.
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
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 – 2020 Edition
- Best Second Chance Accounts (2020 Edition)
- Check out our List of Banks That Don’t Use ChexSystems covering all 50 states. Somewhat outdated as of 2020, 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
ChexSystems Official Website