loanbits

What is ChexSystems? And Why am I on Their List?

Tens of thousands of people are on a list that they don’t want to be on.  It’s the list of people who are “risky” bank account customers compiled by ChexSystems, Inc.  If you are on this list, it is very difficult to open a new bank account, as most U.S. banks use the list to make their new account opening decisions.  Understanding what ChexSystems is, and how you get on their list, is important.  Luckily, you may still be able to get a bank account, even if you are on the list.

ChexSystems started compiling a list in 1971.  Since then, ChexSystems has offered a service that returns information to a financial institution’s “new account desk”.  The information includes data about individuals’ prior banking history, including data like: prior account closures, account inquiries, unpaid NSF checks, etc.  Put another way, ChexSystems provides information about people who have had banking problems in the past.  Banks use this information in the new account opening process.  If you are on the ChexSystems list, most banks won’t let you open a new bank account with them. 

ChexSystems is a consumer reporting agency.  They receive data from banks about their customers.  The data is intended to help participating banks manage risk, prevent fraud, and comply with account-opening regulations. Data gathered from participating banks includes information on accounts that have been forcibly closed (e.g., for too many NSFs), applications for new accounts, and information about new check printing requests.

It is estimated that about 9,000 unique banks and well over 100,000 branch locations use data from ChexSystems in their new account opening processes.  That means that it is difficult to find a bank that doesn’t use ChexSystems.

Luckily, there are still a few banks that don’t use ChexSystems in their new account opening processes. Some of these banks offer guaranteed approval of new applicants.  The accounts may cost slightly more than traditional accounts, but the convenience of having a bank account greatly outweighs the added expense.  So, even if you are on ChexSystems’ list, there’s hope!  You can still find a bank that will let you open an account and enjoy the convenience and cost savings of a bank account.

If you are not on ChexSystems list, make sure you stay off.  Always make sure you have sufficient funds in your account before you pay a bill.  Avoid NSFs at all costs.  If you do happen to bounce a check, make sure you deposit funds quickly to cover the insufficient balance.  Staying off the list is easy.  Things get difficult once you are on it.