When you use credit your credit activity is reported to the credit bureaus, who in turn report to FICO which compiles your credit score. In a similar manner banks, credit bureaus and other financial institutions also report on negative handling of your checking or deposit accounts to Chex Systems Inc., which compiles a report which is then made available to member institutions which pool information. Non member financial institutes may not utilize the service.
Around 80% of financial institutions use Chex Systems Inc. Chex Systems is regulated by the Credit Reporting Act and is also a licensed debt collection agency. Members check a report each time someone wishes to open a checking or deposit account.
If you have had a bank account which has been handled badly your name may well be on the Chex Systems list, which will most likely result in your being turned down for a bank account from one of the member institutions who may judge you to be a high risk customer. That will however still leave you with 20% of banks to approach which do not use Chex Systems.
Consumers are entitled to one free report annually from Chex Systems which can be applied for online at www.consumerdebit.com/ . The type of negative information which the Chex System report may include will be such things as bounced checks, writing bad checks, balances which have not been paid down, which bank accounts you have closed, and which you have attempted to open.
Any incorrect information held can be removed but accurate information will stand for five years. Those with a bad banking record can source a bank which does not use Chex Systems and offers what are known as second chance checking accounts. These are primarily aimed at those with poor credit.
Chex Systems Inc. offers financial tips to those with bank accounts on how to manage them well. It advises that consumers should be aware of their balances by monitoring checks written, debits paid and ATM transactions. It advises on the importance of thoroughly checking bank statements at least once a month, as well as utilizing opportunities to check balances on line.
It also advises consumers to consider having overdraft protection in place. It warns consumers that badly managed bank accounts which are reported to Chex Systems may result in difficulties in opening future bank accounts.
If you do have problems in opening a bank account then ask the bank in question if they have received negative information regarding you from Chex Systems, and order your free annual report. However if the information listed is correct you will probably need to resort to a second chance checking account to build and improve your banking reputation.