Claire Henry

Have you ever been denied a checking account or had your account closed without your permission? If the answer is yes, then you may have a negative ChexSystems report.

So, how does your name end up on the reporting agency’s file?

This negative report is usually a result of previous problems with your account, such as outstanding balances, unpaid bills, bounced checks, fraudulent activities, and identity theft.

The good news is some banks have a solution for you to improve your score. Not only do they offer a second chance checking accounts, but they also allow you to remain in the banking system.

Over time, showing responsible banking behavior can improve your banking score.

What is ChexSystems?

It is a national Consumer Reporting Agency (CRA) that provides financial institutions like banks with credit information. It also offers financial institutions with account applicants’ financial information.

» For more details, here’s how ChexSystems works

ChexSystems report

Your ChexSystems report shows your banking history needed by banks when opening accounts.

This report contains information that banks submit to the agency about problems with account holders. It’s important not to confuse it with a credit report as it’s not the same as the ChexSystems report.

Generally, you can still get a bank account with bad credit, but there will be challenges with a bad banking history.

Anything negative on a banking history can lead to a low bank score or suspension of bank accounts.

Negative items in your banking report may include:

  • Unpaid balances primarily from overdrafts and outstanding negative balances
  • Banks are likely to flag an account holder that repeatedly writes checks that bounce.
  • A debit card or ATM abuse, including fraudulent activities such as regularly depositing empty envelopes when making ATM deposits
  • Someone who repeatedly reports their debit card or checks stolen can be flagged for potential fraud.
  • Suspected fraudulent activity or identity theft
  • Numerous account and credit inquiries
  • Excessively applying for multiple accounts within a short period can be a red flag for potentially fraudulent activities.

You can demand your report if you were denied a chance to open a savings or checking account. 

To request your report, you can fill out this form on ChexSystems official website.

How long does customer data stay on ChexSystems reports?

ChexSystems retains data for as long as five years.

If a customer maintains a good banking reputation for five years, all the negative information will be removed from the consumer disclosure report.

What to do if ChexSystems blacklists you?

There are several actions that you can take to improve your overall banking score.

Payoff any outstanding fees

Pay off outstanding fees that will allow you to get your finances on the right track.

If you are unable to clear the outstanding fees at once, consult with the bank or creditors for them to allow you to pay the debt in intervals until it is all cleared.

Afterward, let the creditors know to update your information with ChexSystems.

Dispute any errors found on your report

There is a possibility that an employee in the company may have accidentally blacklisted you or incorrectly recorded your information.

Dispute the error with the agency or the bank that provided the firm with the data.

The incorrect information in your Consumer Disclosure report will need to be dealt with as soon as possible to avoid any further financial issues. 

There is a possibility that an employee in the company may have accidentally blacklisted you or incorrectly recorded your information.

  • Examine and analyze your ChexSystems report. While at it, pay attention to the incorrect and inaccurate points and information
  • Pinpoint information in your report that has passed five years.
  • If you find errors in your report, you can demand an investigation and can submit a dispute directly on ChexSystems website.
  • To complement and support your error claims, gather and provide any relevant documents that will help you authenticate these errors.

The company will look into the situation and resolve the matter within 20-30 days.

You can also ask the bank or creditors to update your ChexSystems data or demand the corrected documents and submit them to the company.

Apply for your consumer disclosure report

Every 12 months, the company must provide you with a free copy of your consumer disclosure report.

You can request a copy of the report on the company’s website, contact them on the phone by calling 1-800-428-9623, or sending them an email. 

Start a fresh start or second-chance checking account

Customers who are not able to open a standard bank account receive second chance accounts.

The new account may require you to maintain a certain amount as your minimum account balance.

As a second chance account owner, most financial institutions will require you to manage and maintain the account properly.

Banks regularly check how you use your second-chance checking account. They may convert it to a regular bank account if you maintain good banking history.

The conversion to a regular checking accounting may occur within 12 months.

File a formal complaint if you are still blacklisted by ChexSystems

There are possibilities that one or both institutions will ignore your claim to remove the false or argued information.

You can report the issue to the relevant authorities like Consumer Financial Protection Bureau (CFPB), Office of the Comptroller of Currency (OCC), or the National Credit Union Administration (NCUA).

You may file a lawsuit against the bank or the ChexSystems Company, or both institutions if the issue is not solved.

How to avoid being blacklisted by ChexSystems in the future

There are several steps that you can take to avoid being blacklisted.

Check your bank account frequently

Monitoring and managing your bank account balance is an easy process and does not take up much of your time.

You can do this in the comfort of your home over the phone, or you can visit an ATM or check online.

This will allow you to keep track of all your finances. It will be easy for you to identify and report any suspicious activities.

Have enough information about bank policies and fees

Before signing up with a bank, ask if the bank charges maintenance fees, how the bank processes checks, and any other activities that may harm your banking history.

Formally close inactive accounts and discontinue any automatic payments

Having a zero bank balance is not the same as closing it. In some banks and credit unions, the account may continue to incur fees or process automatic payments for as long as it’s open.

This will leave you with a negative balance and unpaid overdraft fees.

Final thoughts

Banks use agencies like ChexSystems to help guide them on how risky a consumer is for their banking products.

Knowing what causes a negative report will help avoid being on the ChexSystems blacklist and prevent being denied a chance to open a savings or checking account. 

Let’s hear from you by continuing the conversation below!

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