Most of us understand the basic concept of the American credit system and how it functions. Whenever you apply for a new loan or credit card, it is normal for the lender to look at your creditworthiness and debt history by obtaining your credit score. Banks access this credit score from certain credit reporting agencies known as credit bureaus. In the United States, the three primary credit bureaus that lenders use are TransUnion, Equifax, and Experian.
What is ChexSystems?
In addition to these three major credit bureaus, there is also a consumer reporting agency called ChexSystems.
ChexSystems, sometimes miswritten as “Check Systems”, functions like the credit bureaus in many ways. However, ChexSystems focuses more on your past savings and checking accounts rather than your debt accounts and repayment history. Roughly 80% of banks in the United States will screen their applicants through ChexSystems before approving a new deposit account. Early Warning Services (EWS) and TeleCheck are two similar but less utilized agencies.
When the three credit bureaus each generate a credit score for you, it is possible that it will be a positive thing for you. The higher your credit score is, the lower your interest rate will be when borrowing money. That is why you want to get your name in the system and establish a responsible credit history.
Unfortunately, this is not the case with ChexSystems because all it does is report bad news. Since they only track negative history about your deposit accounts, they will only generate a negative score for your report. It is kind of like how the police and the federal government have a criminal records system which keeps records on people who’ve committed crimes. The only record you could have in such a system is a bad record. ChexSystems works in a similar fashion.
Therefore, it is best to not even have a score with ChexSystems. Sadly, this is difficult to achieve because it only takes one mistake for your name to be recorded in their system. For instance, if you bounced a check, had an overdraft, or failed to pay any of your banking fees in the past, then you would have a negative record on ChexSystems. Each negative record will decrease your ChexSystems score, which can be anywhere between 100 and 899. Obviously, a credit score closer to 100 means it is a bad score.
How to Request Your ChexSystems Report or Score
ChexSystems is owned by Fidelity Information Services (FIS) and is subject to the Federal Fair Credit Reporting Act. Every 12 months, or whenever you are turned down when opening an account, you have the right to request a free copy of your ChexSystems report. You can do so online via this link, by calling 800-428-9623, or by mailing or faxing this form.
However, this free report will not have your actual ChexSystems 100 to 899 score. At the present time, you cannot find out your score online. To receive a written copy of your score, mail or fax this completed form to the address and number listed on the document.
How Long Does It Take to Get Out?
Negative records are kept in the ChexSystems database for a period of 5 years.
You can submit a dispute online to get any incorrect information out of your report. You should also contact the bank that reported the info, as they can also request removal of the information.
Banks That Don’t Use ChexSystems in 2019
The fact that nearly 80% of American banks use ChexSystems doesn’t mean it is impossible to open a new deposit account if you have a low score in their system. What about the other 20% of banks which don’t use ChexSystems? You could always go to one of them, right? These banks might still run a credit check on you with the three main credit bureaus, but they won’t run a ChexSystems check. There are also banks that might check your ChexSystems report, but they won’t base their final decision on it.
If you have a negative report and you want to apply for a checking or savings account, then consider applying at one of the non-ChexSystems banks below. Here are the banks that don’t use ChexSystems:
- Chase Bank: Chase Total Checking
- TD Bank: TD Convenience Checking
- Regions Bank: LifeGreen Checking Account
- BBVA Compass: ClearConnect Checking
- SunTrust Bank: Personal Checking Account
- Green Dot Bank: GoBank Account
- Fifth Third Bank: Express Banking
- U.S. Bank: Easy Checking
- Chime Bank: Chime Account
- Empower Finance: Checking Account
- Renasant Bank: Renasant Checking
- United Bankshares: United Free Checking
- First National Bank Texas: Power Checking
- TCF Bank: Free Checking
- FSNB: Basic Checking Account
- Navy Federal Credit Union: Checking & Debit
- USAA: Classic Checking
Second Chance Checking Accounts
If you are unable to get approved for an account with any of the above non-ChexSystems banks, your best backup plan is a “second chance” account. Second chance checking accounts are specifically designed for people who can’t get approved for a regular account due to bad credit or a low ChexSystems score.
Because banks believe these account holders are a greater risk, second chance accounts come with restrictions and higher monthly fees. Account limitations may include no debit card and no overdraft protection. So the fees and restrictions don’t come as a surprise, be sure to read the fine print when you sign-up. Here are banks that offer second chance accounts:
- Wells Fargo: Opportunity Checking
- PNC Bank: Foundation Checking
- BBVA Compass: ClearChoice Free Checking
- Woodforest National Bank: Second Chance Checking
- East West Bank: Community Checking
- Axiom Bank: Opportunity Account
- Radius Bank: Essential Checking
- Bank OZK: Pathway Checking
- Centennial Bank: Opportunity 100 Checking
- Landmark Bank: Rebound Checking
- Peoples Cash Solutions: Second Chance Checking
- Republic Bank: Checking Builder
- MemoryBank: Memory Builder Checking
- City National Bank: Bounce Back Checking