ChexSystems® is a reporting agency that tracks consumer banking history, and its database can indicate if you've bounced checks, incurred unpaid bank fees or overdrawn your balance. You can check what information, if any, that ChexSystems has about you by requesting a free annual report from the company.
Once every twelve months, individuals can request a report from ChexSystem for free.
ChexSystems and Opening Accounts
When you apply for a new bank account, the bank or credit union will often pull your report from a service called ChexSystems. If that report shows that you've engaged in certain behavior at other banks, like bouncing checks, the bank might see you as too risky and refuse to allow you to open an account. Since many different institutions use ChexSystems, this can make it hard to open an account if you have too many marks against you in the company's database. Information on your record at ChexSystems can stay there for up to five years.
Getting Your Report
Under a federal law called the Fair and Accurate Credit Transaction Act, you're allowed to request a copy of the ChexSystems report about you every 12 months for free. You can do this through postal mail by using a form to download and print that is available at the company's website, by phone, by fax or electronically at the ChexSystems website. You'll be asked to provide information like your current and previous addresses, phone number, Social Security number and driver's license number, if you have one. Once you submit your request, ChexSystems will generally send you your report within five business days.
The report will potentially contain entries for your various bank accounts, including any issues the banks may have reported. You should review it carefully when it arrives and make sure that it is correct.
Dealing With Incorrect Information
If you see something on your ChexSystems report that isn't true, you legally have the right to challenge it. You can either dispute the incorrect information with the source of that information, which generally will be a bank, or directly with ChexSystems.
You can submit the dispute online or do so by mail or fax by writing a letter or filling out a form available on the ChexSystems website. If you have documentation showing what's incorrect and why, you should include it with your form. ChexSystems advises you to send copies, not original documents.
If you don't have any documentation you need to submit, you can also call to dispute something on your report. However you file your dispute, ChexSystems says it will generally finish its investigations within 30 days and let you know the status by postal mail.
- Prevent negative information from appearing on your ChexSystems report by being careful to write checks only for the amount of funds you have in your account. Cover any shortfalls with a cash deposit or transfer from another account immediately after you write a check if need be, or obtain overdraft protection from your bank.
- Linking your checking account to your savings account may be possible with some banks, and this can also prevent bounced checks in the event of an emergency or error on your part.
- You can obtain a report for a spouse if your spouse gives you a notarized power of attorney. This can be done only by mail or fax, and the power of attorney must be mailed or faxed along with the order form.
- Do not close checking accounts until you are sure every check has cleared. A closed checking account that results in checks being returned for insufficient funds is reported to ChexSystems and the checks are treated as any other bounced checks.