ChexSystems Removal: 6 Steps to Get Out of ChexSystems
If you've been turned down for a checking account, you might have a negative banking history with ChexSystems, a consumer reporting agency that tracks bank accounts and issues reports about potential customers to banks. Fortunately, there are still ways to bank even if you have a ChexSystems report, including disputing the negative information or opening a second chance checking account.
What Is ChexSystems?
ChexSystems is a consumer reporting agency that keeps track of individuals' negative banking history, including things like overdraft items, unpaid fees, and fraud. You can think of it like a credit bureau except the reports are limited to your banking information.
While not all banks use ChexSystems, media reports state that somewhere between 80 and 90 percent of banks do, so having negative banking items in your past can make it difficult to open a new account.
Fortunately, having a ChexSystems report doesn't necessarily mean you're out of options. There are a number of strategies you can try to clear up a negative banking history, including disputing the report, appealing directly to the bank, or working with a bank that offers a second chance checking account.
Reasons You’re in ChexSystems
There are several reasons why someone might end up with a ChexSystems report. If you've been turned down for a new bank account, you might have a history of the following:
- Account closed for cause - This indicates that a bank has closed your account because you handled your banking poorly, including writing bad checks or committing fraud.
- Bounced checks or overdrafts - If you write checks without having enough money in your account to cover them, you might have a ChexSystems report. Generally, one mistake here or there isn't enough to trigger a report, but bank customers who repeatedly bounce checks are likely to end up in ChexSystems.
- ATM or debit card abuse - Generally, this refers to fraudulent behavior, such as entering a deposit into an ATM but depositing an empty envelope rather than the money stated on the deposit.
- Applying for too many accounts - If you apply for too many new bank accounts within a short period of time, this may trigger a ChexSystems report.
- Losing bank cards repeatedly - Customers who repeatedly report a lost debit or bank card may end up with a ChexSystems report. An occasional lost card is unlikely to result in a report.
- Suspected identity theft or fraud - Engaging in any kind of identity theft or fraudulent activity can trigger a ChexSystems report.
- Unpaid fees - If you have unpaid fees or a negative balance at a bank, you may end up with a ChexSystems report.
Like the credit bureaus, ChexSystems also assigns individuals a consumer risk score. These scores range from 100 to 899, with a higher score indicating a consumer who poses a lower risk.
How to View Your ChexSystems Consumer Disclosure Report
If you've been turned down for a bank account, one of your first steps should be to obtain a copy of your ChexSystems report so you can see which items have been reported. You can get a free copy of your report once every 12 months or upon request if a bank has denied you an account within the past 60 days.
You can obtain your report from ChexSystems in one of two ways:
- Call the automated voice messaging system at 800-428-9623 and follow the prompts, or
- Go to the ChexSystems website and complete the report request form. You can submit it to ChexSystems online or send it via regular mail to:
Chex Systems Inc.Attn: Consumer Relations7805 Hudson RoadSuite 100Woodbury, MN, 55125
How to Get Removed from ChexSystems (6 Strategies)
If a negative banking history is holding you back from opening a new account, you can try removing these items from your ChexSystems report. Here are six strategies to consider.
File a Dispute with ChexSystems
Once you have your ChexSystems report, review it thoroughly, checking for mistakes and inaccurate information. If you identify errors or inaccuracies, you can dispute these directly with ChexSystems.
There are three ways to file a dispute with ChexSystems:
- Online - You can file a dispute by visiting the ChexSystems website and navigating to the online dispute center.
- By mail or fax - You can also mail or fax your dispute to ChexSystems by printing out the dispute form and sending it, along with any supporting documentation. The fax number is 602-659-2197 and the mailing address is ChexSystems, Inc., Attn: Consumer Relations, 7805 Hudson Road, Suite 100, Woodbury, MN 55125.
- By phone - You can file a dispute with ChexSystems over the phone by calling 800-513-7125. Keep in mind, however, that ChexSystems doesn't handle disputes involving fraud or identity theft over the phone.
Once you file a dispute, the Fair Credit Reporting Act (FCRA) gives ChexSystems 30 days to complete the investigation process. For residents of Maine, the investigation process can take no longer than 21 days.
Pay Off Your Debt
If an unpaid item in your ChexSystems report is accurate and ChexSystems won't remove it, you can try paying it. To do this, you'll need to contact the bank where you owe the money.
If you're working with a tight budget, the bank might agree to a reduced amount as long as you can pay it all at once. It's worth asking if the bank is willing to accept a percentage of what you owe in a lump sum.
When you agree to settle a past debt, make sure the creditor or bank is willing to contact ChexSystems and have the negative item removed from your report. It's good practice to get all settlement agreements in writing so you can prove the bank agreed to remove the entry from your file.
Provide a Consumer Statement
If your dispute fails because ChexSystems determines the item is accurate, federal law gives you the right to add a consumer statement to your ChexSystems report. When banks or other potential creditors pull your report, they will see this statement, which might persuade them to overlook a negative item.
There are some limits to the length and content of consumer statements. If you choose to include one, it must comply with the following:
- Consumer statements can't exceed 100 words (this limit is 200 words for residents of Maine).
- You can't name any businesses or individuals in your statement.
- You can't include any profanity.
- The statement must pertain to the negative information in your report.
- Any personal information in your statement will be viewable by financial institutions and creditors so keep this in mind when you submit a statement.
If you want to include a consumer statement in your ChexSystems report, visit the ChexSystems website and fill out the statement request form. You can submit it via fax or mail.
File a Complaint with a Regulatory Organization
If you believe ChexSystems is inaccurately reporting a negative item, you can try filing a complaint with the Consumer Financial Protector Bureau (CFPB), which is the regulatory agency that oversees financial institutions and consumer reporting agencies.
File a Lawsuit
In limited cases, it may be appropriate to file a lawsuit to get a negative item removed from ChexSystems. If you truly believe an item is being inaccurately reported and you've exhausted all your dispute options, you can consult with a lawyer about the possibility of filing suit against ChexSystems or the creditor or bank reporting the inaccurate item.
Some lawyers will accept cases on a contingency basis, which means you pay little or nothing up front. If your case is successful, the lawyer will take a percentage of your settlement or damages as payment.
Wait It Out
If you've tried disputing a negative item and your creditor or bank is unwilling to delete an item in exchange for a settlement, you might simply have to wait for the negative item to drop off your ChexSystems report.
A negative item can stay on your ChexSystems report for up to five years. In the meantime, you can look for a bank that offers a second chance checking out, which is an account designed for people with a negative banking history.
Handling No Response from ChexSystems
Under the FCRA, ChexSystems has 30 days to investigate a dispute and remove an item if it turns out the item is being inaccurately reported. If ChexSystems fails to complete their investigation within 30 days, they must delete the item in dispute.
If ChexSystems is completely unresponsive to your dispute, you can file a complaint with the CFPB. When you file a dispute with ChexSystems or your bank, send correspondence via certified mail and make copies of all paperwork and documentation so you can prove you actually submitted a dispute.
What If You Lose a Dispute?
If ChexSystems investigates a disputed item and determines that it's accurate, you can try disputing the item with the bank that reported it. To do this, you'll need to contact your bank and find out how to file a dispute.
Financial institutions are required to adhere to the FCRA, which means they have 30 days to investigate a dispute and respond. If the bank can't prove that the item you're disputing is accurately reported, it must remove the item from ChexSystems.
Getting turned down for a bank account can be frustrating, but you still have options. If you've tried disputing a negative item with ChexSystems and can't get it removed, here are some next steps to consider.
Negotiate with Creditors
It never hurts to contact the creditor or bank directly, especially if you're a long-time customer who simply encountered a rough financial patch. You can offer to pay off any unpaid items in exchange for the bank removing a negative item on your ChexSystems report.
Avoid Accumulating More Negative Banking History
Once you have cleaned up your banking history, avoid accumulating new negative items, as this will most likely result in another ChexSystems entry. If you've struggled with negative items in the past, consider the following tips for keeping your bank account in good shape.
- Avoid overdrafts - If you have a history of overdrafts, consider linking your checking account to a savings account that can cover any overdrafts, preventing costly fees.
- Pay fees right away - Don't let fees linger. Pay them as soon as possible so the bank doesn't report them to ChexSystems or cancel your account.
- Set up account alerts - If you tend to run low on money in your bank account, set up real-time alerts that send you a text or email if you're in danger of overdrafting your account. Most banks now offer this type of service for free, which can make it easy to stay on top of your finances.
- Enroll in direct deposit - Sign up for direct deposit so your paycheck goes directly into your checking account. This makes it easier to avoid overspending on payday, and some banks will even let you receive your paycheck up to two days early.
Open an Account with a Non-ChexSystems Bank
Although up to 90 percent of banks use ChexSystems, not all of them do. If you've had a hard time opening a checking account, you can try looking for a bank that doesn't use ChexSystems, or you can find a bank that offers second chance checking.
Like the name indicates, a second chance checking account can give you a new opportunity to establish a positive banking record. While some of these accounts come with restrictions and fees, such as a monthly maintenance fee, most banks will let you upgrade to a regular checking account once you've maintained a clean record for a certain period of time.
How to Get Removed from ChexSystems FAQs
If you've been denied a bank account, you may be wondering how to get removed from ChexSystems. Here are some commonly asked questions and answers about removing a negative banking history from your personal banking file.
Can You Be Removed from ChexSystems?
It's possible to get removed from ChexSystems. You can file a dispute with ChexSystems or dispute a negative item directly with the bank that reported it.
By law, ChexSystems has to investigate a disputed item within 30 days and remove it if it's inaccurate. If ChexSystems fails to respond to your dispute, you can try filing a complaint with the CFPB, which is the federal agency that regulates consumer reporting companies.
How Long Does It Take to Get Removed from ChexSystems?
A negative item can remain on your ChexSystems report for up to five years. If you dispute an item, ChexSystems has up to 30 days (21 days for residents of Maine) to investigate it and remove it if it's inaccurate or a mistake.
How Do You Pay Off ChexSystems?
You can't pay ChexSystems directly, but you can contact your bank and offer to pay off any unpaid fees or negative items. If you go this route, it's a good idea to get everything in writing so you can prove the bank is willing to accept a settlement.
Can a Bank Override ChexSystems?
A bank can choose to overlook a ChexSystems report if it decides it wants to bank with you. ChexSystems simply reports negative banking history, but banks aren't obligated to deny anyone an account.
If you have a record in ChexSystems, it's worth initiating a dispute if you believe a negative item is inaccurate or erroneously reported, as this may help you clear your financial good name so you can open a bank account. If you're unsuccessful, a second chance bank account can offer an opportunity to rebuild.
About the Author
Mike is a recognized credit expert and founder of Credit Takeoff. His credit advice has been featured in CNBC, Investopedia, CreditCards.com, Bankrate, Huffpost, The Simple Dollar, Reader's Digest, LendingTree, and Quickbooks. Read more.