ChexSystems
ChexSystems is a reporting agency that collects your banking history for checking accounts and savings accounts from banks and credit unions. It is usually referred to as your “Chex report”.
This is different from the credit card / lending world where banks pull your credit score and use your credit history to determine your eligibility. When opening a checking or savings account, the banks will likely pull your Chex report to determine your eligibility. It is estimated that approximately 80% of banking institutions use ChexSystems during the application process to assist them with account approvals and denials. Your Chex report does not affect your credit score, they are two different systems tracking separate data.
What Information is Chex Tracking?
ChexSystems maintains a report of your banking history and activities including:
- Overdrafts
- Bounced checks
- Negative balances that were left unpaid
- Accounts closed by the bank
- Fraudulent activity
- Identity theft
- Number of accounts opened
Chex Sensitive
When opening a new deposit account, most institutions will pull your Chex report during the application process. Having multiple accounts open does not necessarily mean that one will be denied for the new account.
The banking institutions can set their own parameters as to what they find acceptable or what they will deny for. For example, let’s look at someone that has multiple open accounts in the past year with no negative activity on any of the accounts. This person has excellent banking history with no overdrafts, no negative account balances, etc. This person has several accounts open due to working on multiple bonus offers in the past year. If the bank is not “Chex sensitive”, they can still approve the account for this person due to the lack of negative activity on the Chex report.
When a banking institution is “Chex sensitive”, the same person described above will most likely be denied due to having opened multiple accounts in the past year. This means that this bank is looking at the number of opened accounts in the past 12 months, in addition to verifying there’s no negative activity on the Chex report. The institution will set the parameters as to what they find acceptable and these parameters can vary from bank to bank.
Why Is Chex Important?
The banking institutions want to ensure that they do business with customers that are not engaged in any fraudulent activities, money laundering, closing accounts with negative balances, etc. This makes sense and it is an important step for them to get to know their customer. In order to keep a good Chex report, refrain from doing the following things:
- Have accounts with negative balances
- Engage in any type of fraudulent activity
- Overdrafts
- Close accounts with negative balances
- Write checks that will be rejected due to low account balances
What Can I Do If Denied Online Due To Chex?
Online application denials due to Chex are not uncommon. There’s a couple of avenues available to take in order to get a second chance at getting approved. The easiest option is to call and speak to a CSR (customer service rep). The representative can ask more questions and verify the information you are providing. They also have more discretion than the automated online application system.
If the CSR cannot open the account over the phone, it might be worth stopping by a branch if there’s one nearby, and speaking to a bank representative in person. The bank rep can verify your identity in person and assist with opening the account if they determine that everything is correct and there is no fraudulent or negative activity in your banking history, even when a Chex report shows multiple open accounts. In some cases, they may still deny the application due to the number of open accounts. In this case, don’t stress about it and move on to the next bonus. There’s always plenty of bonus promotions out there.
How To Obtain Your Chex Report
Under the Fair Credit Reporting Act (FCRA), you are entitled to a free copy of your consumer disclosure report, at your request, once every 12 months. ChexSystems provides all consumer disclosure reports and consumer score reports free of charge.
If you have been denied an account and ChexSystems was used in the decision process, you can request your consumer disclosure report to help you understand what may have contributed to that decision.
You can obtain your Chex report by requesting it on their website here: Chex Systems.
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