All About ChexSystems

If you’ve ever been denied a bank account or had a check turned down at the cash register, you likely had a run-in with a company like ChexSystems.

When you apply for a new bank account or write a check at the register, you are authorizing the company you’re doing business with to pull your consumer file from a “check reporting agency”. This term is an older term for these types of agencies since people don’t write checks as much as they used to. The standard term for all agencies like this – including credit bureaus – is “consumer reporting agency”.

The important thing to remember is that these agencies (while they don’t report credit accounts) are treated with the same regulations as credit bureau under the Fair Credit Reporting Act (FCRA).

What this means for you is that they have to follow a strict set of guidelines for reporting information correctly.

Through the FCRA you, as a consumer, are given the right to dispute inaccurate information on your report and ChexSystems is required to investigate any dispute you submit – unless they deem it “frivolous”.

** Under the FCRA you are entitled to receive a free copy of your ChexSystems report once a year. **

Most information reported on your ChexSystems consumer file will remain there for 5 years, but ChexSystems is allowed to keep it for a maximum of 7 years under the FCRA.

ChexSystems is an agency that collects information from banks and credit unions all over the U.S. and includes them in your file. Below is a list of items they include on your file that may impact your ability to get new accounts at credit unions / banks (depending on the institution’s requirements).

NEW: ChexSystems Score – Just like a credit bureau, ChexSystems has begun calculating scores for consumers that banks and credit unions are now using in their decisioning. Your “CHEX Score” can range from 100 – 899 and is based on the factors below.

• Negative Information 

  Items such as accounts closed due to excessive overdrafts, NSF activity, account abuse, ATM fraud, and other violations of the bank’s rules. Some of these are more severe than others.

  If you have had an account closed with a balance owed to the bank, they will include the amount and reason it was closed.

• Inquiries 

  When a bank, credit union, or merchant pulls your ChexSystems report at your request, an inquiry is added to your file. This process is nearly identical to a credit bureau.

  Some banks and credit unions do not care how many inquiries you have had on your ChexSystems file, but many others will not approve you if you have had too many.
  (For a list of banks/credit unions that are Inquiry Sensitive, see our post here.)

  Moreover, banks and credit unions are now looking for people who have been applying for accounts in rapid succession and use the time since your last inquiry in their decisioning. This will affect people gunning for bonuses most and traditional consumers far less.

• Assets

  A new tool that ChexSystems has begun reporting is a list of your assets (car, house, boat, etc.) that they obtain through a partnership with LexisNexis Risk that combs through public information databases for new documents and purchases.

  Often this is used in a bank’s decision, but it weighs less heavily on your report and ChexSystems score than other factors.

• Address History / Time At Current Address

  While reviewing your report and factoring your score, the time you have been at your current address plays a major role on your ChexSystems consumer file.

  ChexSystems uses the address information reported by inquiries and accounts to determine how long you’ve been at your address. From various sources across the web, it sounds like having more than 4 different addresses reporting on your consumer file in the last 5 years will negatively impact your ChexSystems report.

If you’re reading this post and you’ve been turned down due to some negative information on your ChexSystems report – don’t fear, there are many ways to fix your report and get back on the track toward success.

If you’re looking to improve your ChexSystems report and score, disputing inaccurate information and unauthorized inquiries is a good place to start. Also, if you’ve had an account closed because of overdraft / NSF activity, talking to the bank often helps and they sometimes will remove their negative information if you pay them back.

Additionally, if you’ve filed bankruptcy and included the bank/credit union, providing ChexSystems a copy of your Notice of Filing usually will get them to completely remove the accounts included.

For more information on how to fix your ChexSystems report and credit reports, check out our section on Credit Repair.

*As always, the information contained on this website is intended to be used for informational purposes only, does not guarantee results, and is subject to change. Any regulations from agencies or companies can change any time at the company’s decision and may make information on this site outdated. Your mileage may vary with any tutorial or guide contained herein. For the most up-to-date information please contact each company / credit bureau directly.*