ChexSystems is a consumer reporting agency that collects information about how people have handled checking and savings accounts. Banks and credit unions may check your ChexSystems report when you apply for a new account, so a negative record can make it harder to open one. This guide explains what ChexSystems reports, how long information stays, how to get your report and what to do if you have problems.
Key takeaways
- ChexSystems tracks account history such as unpaid balances and involuntary account closures. It is separate from your credit reports.
- Negative information can generally stay on your report for up to five years.
- You can request your report and dispute errors.
- If you are denied an account, a second-chance checking account may be an option.
What is ChexSystems?
ChexSystems is a specialty consumer reporting agency that banks and credit unions use to assess the risk of opening an account for a new customer. It is not one of the three major credit bureaus and it does not track your credit cards or loans. It focuses on deposit account behavior.
Not every bank uses ChexSystems. Some use other screening services, so being flagged in one does not always mean every institution will turn you down.
What gets reported to ChexSystems?
Banks may report information about accounts that ended with problems. Common examples include:
- Unpaid overdrafts or negative balances left after an account is closed.
- Involuntary account closures by the bank, for example after repeated overdrafts.
- Bounced checks or unpaid fees.
- Suspected fraud or account misuse.
Closing an account in good standing does not create a negative record. ChexSystems may also provide banks with a risk score based on your history.
How long does information stay on your report?
Negative information can generally remain on your ChexSystems report for up to five years. If you repay what you owe, ask the bank to update the record and get confirmation in writing.
How to get your ChexSystems report
- Visit the ChexSystems website and follow the steps to request your consumer report.
- You are generally entitled to a free copy of your report once every 12 months.
- If a bank denies your application based on ChexSystems information, it should tell you, and you are generally entitled to a free copy of the report.
- Review the report carefully for accounts you do not recognize or details that look wrong.
How to dispute errors
If your report contains inaccurate information, you can dispute it with ChexSystems and, where relevant, with the bank that reported it. Include copies of any documents that support your claim. Consumer reporting agencies generally have about 30 days to investigate a dispute. The Consumer Financial Protection Bureau publishes consumer information about your rights.
What if you are denied an account?
You still have options:
- Pay off any balance you owe the bank that reported you and ask it to update the record.
- Try a second-chance checking account. These accounts are designed for people with past banking issues, though they may have monthly fees or fewer features.
- Consider a credit union, which may take a more flexible approach in some cases.
- Look for accounts certified under the Bank On national standards, which are designed to be low-cost and accessible.
- Use a prepaid card temporarily while you work on your record.
Once you are approved, use our guides to online banks with no monthly fees and the best online checking accounts to compare options.
How to avoid ending up in ChexSystems
- Keep a cushion in your account and set low-balance alerts.
- If your bank allows it, consider opting out of overdraft coverage so transactions are declined instead of creating a negative balance.
- Close accounts properly, with a zero balance and written confirmation.
- Pay any fees or negative balances promptly.
- Learn which charges may apply. See our guide to common bank fees.
Frequently asked questions
Is ChexSystems the same as a credit report?
No. ChexSystems focuses on checking and savings account history, while credit reports track credit cards, loans and payment history.
Does ChexSystems affect my credit score?
ChexSystems information is generally not part of your credit reports or credit scores, although unpaid debts sent to collections can affect your credit separately.
Can I open an account if I am in ChexSystems?
Often yes, but it may need to be a second-chance account or an account at an institution that does not use ChexSystems. Policies vary by bank.
How can I remove a ChexSystems record?
Accurate negative information generally cannot be removed before it expires, but you can dispute anything inaccurate. Paying off a debt and asking the bank to update the record can also help.