What Is ChexSystems?

Stressed and worried young Asian woman working from home, handling paperworks and going through her financials

ChexSystems is a banking reporting agency that collects information about your previous problems with deposit accounts, including checking and savings accounts.

The agency maintains a report of your banking activity, which banks and credit unions can use to determine whether to approve your application for a new checking or savings account.

Here's what you need to know about your ChexSystems report, how to clean it up and whether it can affect your credit.

How Does a ChexSystems Report Work?

ChexSystems keeps track of your deposit accounts with banks and credit unions, and creates a report with that information to show your account activities and the reasons your past accounts have been closed.

Here are a handful of examples of items you might find on your ChexSystems report:

  • Involuntary account closure
  • Bounced checks and overdrafts
  • Unpaid negative balances
  • Account, card or ATM abuse
  • Suspected fraud or identity theft
  • Number of accounts applied for recently

Whenever you apply for a new checking or savings account, the bank or credit union will check your ChexSystems report to determine whether to approve your application. If your report shows anything that causes the financial institution to view you as a risky customer, it may deny you a bank account.

Fortunately, there are some banks and credit unions that offer second-chance bank accounts. These accounts are designed primarily for people who can't get approved for a regular bank account due to issues with their ChexSystems report.

However, second-chance bank accounts often charge fees and may provide limited services—for example, you may not be able to sign up for overdraft protection or get access to checks or direct deposit.

You can also apply for a prepaid debit card, which only allows you to use money you've loaded onto your account.

How to Get a Copy of Your ChexSystems Report

The Fair Credit Reporting Act makes it possible for consumers to access their ChexSystems report once every 12 months for free. You can also get a free copy if you've been denied a checking or savings account in the past 60 days.

Also, note that if you've been denied a bank account, the bank or credit union is also required to disclose the reason (or reasons) for the denial.

There are four ways you can request a copy of your ChexSystems report:

  • Online through the consumer reporting agency's website
  • Over the phone by calling 800-428-9623
  • Downloading and faxing a request form to 602-659-2197
  • Downloading and mailing a request form to ChexSystems Inc., Attn: Consumer Relations, 7805 Hudson Road, Suite 100, Woodbury, MN 55125

After the agency receives your request, you should get a copy of your report in the mail within five business days, so requesting one online or via phone will give you the fastest response time.

How to Clean Up a ChexSystems Report

Once you receive your report in the mail, you can check it for negative items. Legitimate information will typically stay on your report for five years, which can make it challenging to get approved for a bank account.

Depending on the situation, though, there may be some opportunities to clean up your ChexSystems report.

If your report shows accounts where you still owe money—such as an account with a negative balance due to overdrafts—pay off the balance of what you owe as quickly as possible. In some cases, you may even be able to settle for less than what you owe.

Once the debt is satisfied, you can file a request with the bank, credit union or collection agency to update or remove the negative item from your ChexSystems report. Alternatively, you can request a receipt for your payment and send it directly to the reporting agency to have your record updated.

If you find anything that's inaccurate on your report, you can dispute it with ChexSystems. Make sure to provide any supporting documentation you might have. The agency can take up to 30 days to investigate it and, if it can confirm your dispute, remove the inaccurate information.

Does a ChexSystems Report Affect Your Credit Score?

Your ChexSystems report has no direct impact on your credit score. However, if you've been denied a checking or savings account and have a ding on your ChexSystems report, it may be a sign that you've had difficulties in the past that may also have an impact on your credit history.

Also, if you have a negative balance on a checking account that's been sent to a debt collection agency, that agency may choose to report the collection account to the national credit bureaus, which can harm your credit score.

If you're concerned about your credit history, it's a good idea to check your credit regularly. Experian's credit monitoring service is free and provides access to your FICO® Score , credit reports, customized alerts and more.

While monitoring your credit won't help you get approved for a bank account, it will help you know where you stand and what you can do to improve your credit history and overall financial health.

Focus on Making Good Financial Choices

Getting denied a bank account can be frustrating and discouraging. But don't let it sap your motivation to improve your financial life. Review your ChexSystems report to see if you can do anything to improve your chances of getting approved.

If you still can't get approved, apply for a second-chance bank account or prepaid debit card, and plan to use them wisely. That way you can avoid any other negative items that could hurt your chances of getting a bank account in the future.

It can take a while to get to the point where you're in good standing again with banks and credit unions, but the effort can be worth it to get back to the type of banking experience you want to have.