We all make mistakes, and writing a bad check is one of the most common financial ones. Unfortunately, banks don't have a very sympathetic view of this activity, and use ChexSystems to track bad check writers. ChexSystems records information in much the same way as credit bureaus, and offers that information to banks. In turn, financial institutions can use that info to keep you from opening new accounts based on information in your ChexSystems report. Information can remain in that system for up to five years.
Obtain a copy of your ChexSystems report through the ChexSystems website if you cannot open a bank account and you were told that ChexSystems information was used to deny you that account. You can also obtain a copy for routine review; this is recommended for anyone, but especially if you have any reason to believe you are a victim of identity theft. It is a good idea to order a copy of your report if any of your checks or bank debit cards are recently lost or stolen. Check the report carefully for any negative information and fill out the dispute form available from the ChexSystems site to report any errors.
Mitigating the Effects
Make sure you make good on any check you bounce. That includes paying all fees that your bank charges and even making good on fees charged by your payee's bank if you are asked to do so. This won't remove the negative information from your ChexSystems report, but your efforts to make good on your error will show up on it. That might help if you are denied a new bank account, as a bank manager can review your report and override any automatic decisions made while applying online.
Not Your Fault?
You see a bad check for $10,000 written to a jewelry store in Las Vegas. You've never been there, and you never keep more than $500 in your checking account because it doesn't pay any interest. That's obviously identity theft, but you have to let ChexSystems know you did not try to buy your lover a ring in a place you have never visited, or else they'll assume you lead a dual life. Fill out the ChexSystems dispute form, and clearly specify that you are a victim of identity theft in the explanation for all disputed items. ChexSystems must issue a fraud alert and remove items that are clearly not your responsibility.
Of course, the best way to prevent any problems is to make sure you have enough money in your account to cover any check you write. If you're occasionally strapped for funds, or if you're a bit careless at times, contact your bank to set up overdraft protection. You may be charged a fee for using it, and you almost always accrue interest unless you cover your overdraft immediately, but it will prevent you from damaging your ChexSystems record.
John DeMerceau is an American expatriate entrepreneur, marketing analyst and Web developer. He now lives and works in southeast Asia, where he creates websites and branding/marketing reports for international clients. DeMerceau graduated from Columbia University with a Bachelor of Arts in history.