How long does ChexSystems information remain on file? Why does it prevent one from opening a CD, savings account or mutual fund?
ChexSystems is a type of consumer reporting agency called a debit bureau. Debit bureaus specialize in collecting information on accounts held at banking institutions, such as checking and savings accounts.
The information debit bureaus collect does not appear in your credit report. Instead, they produce their own report, called debit bureau reports.
Debit bureau reports are governed by the Fair Credit Reporting Act (FCRA), just like credit reporting agencies. In fact, the initials "CRA" stand for "Consumer Reporting Agency," although most people think they mean "Credit Reporting Agency."
Debit bureau reports inform banks and other financial institutions if you have a history of insufficient funds checks or overdrafts on other types of deposit accounts. That's why they can affect a person's ability to open a checking account, certificate of deposit (CD) or invest in mutual fund.
Financial institutions may transfer debts owed as a result of insufficient funds checks to a collection agency. In that case, banking information may show up in your credit report because the collection agency will likely report the account to one or more credit reporting companies. The debt can remain on the report for up to seven years; however, this is not the same as a report obtained through a debit bureau or check verification service.
If you were declined by a bank when applying to open an account you can obtain a report from the debit bureau the bank used. Your bank should have provided contact information for the debit bureau, such as ChexSystems, in the notice telling you that the application was declined.
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The "Ask Experian" team