ChexSystems: Checking Account Credit Repair

Written by Dana Neal

Bank account bad credit can be fixed.

It's important that consumers maintain a checking account in good standing, since failure to do so will often result in a credit denial for many types of credit.

When you go into a bank and apply for a new checking account, the bank will often perform an inquiry on your credit report (Experian, Trans Union, or Equifax), as well as contact the main clearinghouse for checking account reporting, ChexSystems. ChexSystems is technically a credit reporting agency as defined by the Fair Credit Reporting Act, so if you've been denied by a bank for bad credit entries that have been reported in ChexSystems' database, you can challenge them as you would any other credit reporting agency, using credit repair techniques.

What Chexsystems and others report.

Banks are losing about $1.6 billion a year to bad checks as of this writing, so they've taken steps to ban what they consider abusers of the system. Furnishers report adverse consumer history to ChexSystems as a method of enforcement. Such information includes the following and can result in new-account denial:

Forced closure of a consumer's account as a result of nonpayment, bounced checks, or overdrafts
Multiple overdrafts
Savings account, debit card, or ATM abuse
Fraud
Providing false information when opening an account
The consumer's reporting of lost or stolen checks (shared with banks to prevent losses against a closed account)
Attempts by consumers to open more than one account in less than three months (considered a red flag for account theft and money laundering)
Outstanding debts, checks, and payment plans set up when the bank was unable to collect for an overdraft or a payment it honored on insufficient funds (the amount being insignificant)

Again, ChexSystems is technically a credit reporting agency as defined by the FCRA, but it stores data related to checking account history. The de facto standard in checking account reporting performed by banks and credit unions, ChexSystems serves 80 percent of America's financial institutions.⁵ The list remains active for five years.

If you've been reported to ChexSystems, they offer a benefit that is unlike any other reporting agency—one that actually permits people who've had past problems and were subsequently banned to get back into the banking system. Known as Get Checking, it is an educational program designed to help consumers start over. Once a consumer completes an educational course approved by Get Checking, he or she can open up a new account at a participating local bank or credit union using a certificate earned by attending the class. The six-hour classes, which are open to consumers who aren't suspected of fraud and who make good on their outstanding checks and overdraft fees, costs about $40 to $50—a bargain in my opinion. For more information on what may be available in your area, contact www.getchecking.org; for updates. [SEE GET CHECKING UPDATE BELOW]

Treat bank account bad credit entries using credit repair.

Some people don't wish to take part in Get Checking and prefer a different approach to removing the bad credit entries with ChexSystems. They may owe money that they don't have, or may simply have a bone to pick with the bank. If that's your case, you can approach ChexSystems' entries the same as any other adverse data found on a credit report, by using credit repair. Challenge the bad credit entries using a credit bureau dispute letter, or negotiate a deal with the creditor-bank using debt relief tactics found in Debt Fusion.

Since ChexSystems is bound by the FCRA, you are entitled to a free credit report from it once per annum. The following is a list of the other major check reporting agencies and their contact information:

ChexSystems: www.consumerdebit.com
CheckRite: (800) 766-2748
TeleCheck: www.telecheck.com
SCAN/DPPS: www.consumerdebit.com⁶
CheckCenter/CrossCheck: www.crosscheck.com
Certegy/Equifax: www.certegy.com
International Check Services: (800) 631-9656; acquired by TeleCheck in 2002

TeleCheck and ChexSystems are the most widely used checking credit reporting agencies, but it's a good idea to check with all of them if you suspect anything adverse is being reported. Remember, they are considered bureaus by law, so anything on their reports can be disputed and must be deleted if it cannot be verified within 30 days (or 45 if the report was obtained free).

5. Bankrate, "ChexSystems: 'Big Brother' of Banking Is Watching," www.bankrate.com.
6. Both SCAN/DPPS and ChexSystems are owned by eFunds Corporation.

GET CHECKING UPDATE:

Basic Requirements

To participate in Get Checking, you must:

Present one form of identification with a photo.
Pay off any account balances owed to all financial institutions prior to your registration. You will not receive a certificate of completion until payment of outstanding account balances has been proven.
Bring your ChexSystems report to the class so the instructor can attest your eligibility and report your participation to ChexSystems. This is only applicable to individuals with a ChexSystems consumer report.
Actively participate in sessions, attend ALL scheduled classes and BE ON TIME!
Pass a competency test to show you've learned account management skills.

Individuals that have been reported for fraud or suspected fraudulent activity are not eligible to participate in Get Checking. For more information, contact www.getchecking.org. There you'll also find a list of participating financial institutions in your area.