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What You Need to Know About ChexSystems

You might be wondering what ChexSystems even is, and why does it matter to me? We'll break down what consumers need to know about ChexSystems.
What You Need to Know About ChexSystems

Before we start, you might be wondering what ChexSystems even is, and why does it matter to me? ChexSystems is an agency that gathers banking information on consumers. You likely have a ChexSystems record without even being aware of it, as many banks share information with ChexSystems to establish a record of your banking behavior. If you’ve ever been denied the ability to open a bank account, it could be due to a ChexSystems report on your banking history. In this blog, we’ll break down what consumers need to know about ChexSystems

What Information Does ChexSystems Collect?

ChexSystems works with financial institutions to identify consumers who may present a financial risk. The information they collect may be in your control, such as multiple bounced checks, unplanned account closures, or unpaid negative balances. However, other things may be outside your control, such as fraudulent activity on a debit card or checking account.

The goal of ChexSystems is to identify patterns of fraudulent or abusive banking behavior. For instance, having a temporary overdraft and then paying it back may not be a negative mark in a ChexSystems report. On the other hand, if you open a high volume of checking accounts over a short period of time, red flags may be raised. What ChexSystems reporting doesn’t typically affect is your ability to get a loan or credit card. The information only pertains directly to bank account activity, meaning your credit score is typically unaffected.

ChexSystems Records & Scores

The records of your financial history collected by ChexSystems are not permanent. Typically, the information is kept for five years, even if you’ve made significant changes to your financial record during that period. ChexSystems assigns a score to each consumer it surveys, ranging from 200-899. Lower scores are the result of concerns in an individual’s financial history, while higher scores demonstrate a solid financial background. New accounts with lower scores may be denied, or perhaps opened with restrictions by a financial institution.

Your ChexSystems Score should not be confused with a credit score, as the two apply to separate aspects of your financial history. While the credit score focuses on payments on credit cards, rent, mortgage, loans, and car payments, a ChexSystems score focuses strictly on banking behavior.

What Can You Do to Take Control of Your ChexSystems Record

The Fair Credit Reporting Act requires ChexSystems to share its information with consumers upon request for free. This will include the entire record ChexSystems has collected on you over a five-year period. The ChexSystems score is not included in the report however, meaning you’ll have to purchase it from the agency. You can go to ChexSystems website to submit a request form online, or call them at 800-428-9623 to obtain via phone.

Beyond simply viewing your report, there are steps you can take to ensure you’re not denied new bank or checking accounts. Carefully managing your financial accounts will help you avoid negative rankings from ChexSystems. We recommend frequently checking the balances on both your savings and checking accounts, and signing up for overdraft protection to ensure you’re not spending more than you have. When closing a bank account, check back with the bank before opening a new account to make sure you don’t have any lingering fees or recurring payments that posted after the closure. Lastly, check your ChexSystems report annually to avoid any unfortunate surprises.

Staying vigilant is key to financial success in many areas, from loans to debt management and especially navigating through ChexSystems. Don’t be intimidated by this mystery report. By following a few responsible banking practices, you can take better control of your finances!

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