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Five Things You Didn't Know About Chexsystems

Updated on August 28, 2010

You probably already know that leaving bank debts, such as overdraft fees, unpaid will result in your name being entered into Chexsystems. Chexsystems is a reporting agency used by banks to determine if an individual presents too large of a financial risk to do business with. Most consumers, however, are at least partially misinformed about the Chexsystems process and how the system actually works. Here are five things you might not have previously known about Chexsystems.

1. You Can Get a Copy of Your Chexsystems Report

Because Chexsystems is classified as a consumer reporting agency, it must obey the Fair Credit Reporting Act which dictates that all consumer reporting agencies must provide interested consumers with one free report every 12 months. Even if you’ve already ordered a free credit report for the year, that doesn’t affect your ability to obtain a free report through Chexsystems since you get a free report from each reporting agency each year. 

2. You Can Get Out of Chexsystems

Landing in Chexsystems doesn’t have to be a five year prison sentence for your finances. Once you have your hands on your report, you can dispute its accuracy with both Chexsystems and the bank that initially made the report. If the bank cannot verify the accuracy of your debt, Chexsystems has no choice but to remove you from the system. Given that banks frequently delete old records, disputes are successful for many individuals. 

3. Not All Banks Use Chexsystems

Although approximately 90% of banks subscribe to Chexsystems, not all do. Some will merely conduct a credit check. Others, such as internet banks, can often afford to forego both a Chexsystems report and a credit check for new customers. This gives you the option to open up a bank account with a non-Chexsystems bank until your name eventually ages out of the system.

4. Paying Your Debt Doesn't Remove You From Chexsystems

Many consumers eagerly pay off their previous bank debts under the assumption that doing so will rectify their inability to get a checking account. Unfortunately, paying off your outstanding debts to your old bank won’t result in the bank removing you from Chexsystems. In addition, paying off your debts restarts the statute of limitations for a lawsuit. If your bank debt is high or has been turned over to a collection agency, making any payment at all on the old account could prove dangerous. 

5. Banks Can Revoke a Chexsystems Report

Your bank has the ability to remedy its reports at any time. Although the reporting system for Chexsystems is slightly different than the reporting system currently in place for the three major credit bureaus that doesn’t change the fact that under federal law creditors must have the ability to modify or delete reports that were made in error. Regardless of what your run-of-the-mill, high-school age bank teller tells you, you bank can fix your Chexsystems problem. In some cases, a little smooth negotiation with higher ups at the bank can prove beneficial in clearing your name.


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