What is ChexSystems And How Does it Work

What is ChexSystems

What is ChexSystems And How Does it Work

ChexSystems is a nationwide specialty consumer reporting agency under the Fair Credit Reporting Act (FCRA), similar to major credit bureaus such as Experian, Equifax and TransUnion. You might have come across ChexSystems when opening new bank accounts, and especially if you’re into churning bank account bonuses

ChexSystems clients regularly contribute information on closed checking and savings accounts as bank and credit unions. It provides services to financial institutions and other types of companies that have a permissible purpose under the FCRA. ChexSystems services primarily assist clients in assessing the risk of opening new accounts.

When you apply to open a new bank account, most likely they will check ChexSystems. If you have negative items, you could be denied. Some bank are more sensitive than others.

How it Works

ChexSystems is different from credit bureaus. It only contains negative information. Having a ChexSystems record could make it difficult to get approved for new bank accounts.

If you’ve ever had issues with a deposit account, such as a bounced or returned check, overdrafts, or even banking fraud, then it’s possible that you might have a ChexSystems profile.

But even if you have a clean ChexSystems, bank could still deny your application. Besides the negative information, financial institutions can also see the number of inquiries on your ChexSystems report.

So if you have opened three bank accounts in the last 12 months, when you apply to open your next bank account, that bank will see those previous inquiries. Some banks that are ChexSystems sensitive will deny you if you have been opening too many new accounts. These rules vary from one bank to the other, but are usually based on the number of new accounts within the last 12 months. 

A good rule of thumb is to keep your new bank account to about 10 for every rolling 12 months. Once you have more than 10-12 accounts in the last 12 months, you’ll start getting turned down for new accounts.

ChexSystems doesn’t track information about active bank accounts. It also doesn’t contain any information about other banking products such as credit cards, loans, or lines of credit.

Information that’s included in your report will generally remain there for up to five years.

How to Get Your ChexSystems Report

You can order a report to learn what information, if any, is listed in your consumer file at ChexSystems. If you have been denied an account and ChexSystems was used in the decision process, this information will help you understand what may have contributed to that decision. 

You can obtain a free copy of your report and score once every year. Requesting your report does not hurt your standing.

Request your Free ChexSystems Report here. You can also request a report by phone at 800.428.9623, or complete, print and mail the completed Consumer Request for Disclosure Form to:

Chex Systems, Inc.
Attn: Consumer Relations
PO Box 583399
Minneapolis, MN 55458

You must be 18 years of age or older to communicate with ChexSystems. Here’s a sample consumer disclosure report to see what type of information may be reported to ChexSystems.

Can You Get Removed from ChexSystems?

If you have a ChexSystems record because of issues with your bank accounts, it will generally remain there for up to five years. To be removed before then, you must successfully dispute a specific record or resolve the issue with the bank that reported you.

Contacting the bank could be the easier option if you’re at fault, and it’s something minor. Otherwise, you can dispute the incorrect information directly with ChexSystems using this form. Please complete this form and mail it to ChexSystems, Attn: Consumer Relations, PO Box 583399, Minneapolis, MN 55458 or fax it to 602.659.2197.

Reinvestigations are usually completed within 30 days (21 days for residents of Maine). Once it is completed, you’ll be notified of the results by mail at the address you provide.

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