What is ChexSystems?

Source: Thinkstock

Source: Thinkstock

Do you regularly bounce checks? Are you constantly dipping into overdraft or did you skip out on a bill for past due overdraft fees? You might not be thrilled to know that this bad behavior will not stay between you and your bank. Your poor banking choices are being recorded.

You’re likely aware of the three major credit reporting bureaus (Equifax, Experian, and TransUnion), but you may not be aware of another consumer reporting agency called ChexSystems. This agency’s primary job is to keep track of your banking behavior. When you apply for a new account at a banking institution, ChexSystems’ database will most likely be used to see what your banking activity has been like. The reports contained in your ChexSystems file could make or break your chances of approval.

Here are five things you should know about ChexSystems.


1. You are entitled to one free report each year

Thanks to the Fair and Accurate Credit Transactions Act, consumers are eligible to receive one free ChexSystems report each year. You can order the report online, by mail, or by phone (1-800-428-9623). It’s a good idea to order your ChexSystems report each year so that you can keep an eye on any fraudulent attempts to open a bank account in your name. According to the Bureau of Justice Statistics, roughly 37% of identity theft victims in the United States have experienced a bank account breach. If you do find there has been some suspicious activity, make sure to report it. The BJS says that less than 1% of identity theft victims report the fraudulent misuse of their personal information to open an account.


2. Your banking activity is scored

Similar to credit scoring, banking behavior is also given a score. The ChexSystems Consumer Score ranges from 100 to 899. A higher score is an indication of a lower risk. You can get a copy of your banking score, but it’s not free. The fee for obtaining the ChexSystems Consumer Score is $10.50. Requests and payments must be made through the mail and you must be at least 18 years old to submit a query.

3. You have the option to “freeze” your banking report

ChexSystems gives consumers the ability to request a security freeze on their report. This action will stop a consumer reporting agency from releasing information in your file without your authorization. Consequently, loans or credit will be blocked from being approved without your knowledge. ChexSystems notes that this will not prevent pre-approval screenings for new credit. There is no fee for requesting a security freeze or for having it removed. However, there might be certain fees added depending on your state of residence.


4. Errors can be corrected

Check to make sure that personal information such as the spelling of your name and your address are correct. Also check to make certain that the correct banking institutions are listed. You don’t want to be held responsible for someone else’s missteps. Incorrect information or errors in your banking history can be disputed directly with ChexSystems through their reinvestigation form.


5. Negative information stays on your report for five years

If ChexSystems finds that the information is not incorrect, it will remain on your report for five years. If you requested an investigation for incorrect entries, but you are not satisfied with the outcome, you can add a written statement to your consumer file. You will be required to fill out a Request for Consumer Statement Form and mail or fax it directly to ChexSystems.

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