Within the US financial system, there are several government agencies and agencies that perform important functions. Thus we find ChexSystems, which is the equivalent of the FICO credit scoring system, but for accounts.
If you do not know exactly what this entity does, we will tell you how it affects you.
- What is ChexSystems?
- How does the ChexSystems report work?
- Ways to get the ChexSystems report
- What to do if you are in the ChexSystems registry?
What is ChexSystems?
ChexSystems is essentially a consumer information agency on checking and savings accounts. This means that it is in charge of monitoring and keeping a record of the incidents or closures of these financial management instruments.
In this way, banks and credit unions can review the background of those who request the opening of accounts.
If you intend to open an account in the United States, the financial institution in question will review your ChexSystems report. This document details the mistakes you have had in your banking history, such as outstanding debts, unpaid overdrafts, returned checks, account closings and more.
Additionally, this report may contain personal data related to your social security number, public access records, credit freezes, and identity theft alerts.
If you have placed a check order, started a check cashing inquiry, or have opened a number of accounts, this is also recorded.
Like the major credit bureaus, ChexSystems is regulated by the FCRA (Fair Credit Information Act) and the FTC (Federal Trade Commission).
It is also affiliated with the FNIS (National Loyalty Information Services), in charge of providing banking software and technological support to financial entities.
How does the ChexSystems report work?
The importance of ChexSystems is that banks and savings cooperatives can estimate the degree of risk of a customer.
Since this report contains the bad performances within the banking system, within the system you get a rating from 100 to 899 which works the same as the credit score– High scores mean higher level of confidence.
Among the common faults that appear in this report, we can mention the following:
- Negative unpaid balances. Failure 1 or 2 days is not a problem, but if you do not address the problem in time, they report you.
- ATM / debit card abuse. It usually refers to some suspicious or fraudulent activity, such as including empty envelopes when depositing at an ATM.
- Excessive number of requests. It is not advisable to do multiple account requests in a short time, as it is considered an alert.
- Bounced or overdraft checks. If you make a mistake once, nothing happens. When it is repeated, they will include you in the ChexSystems registry.
- Accounts closed for a specific cause. Writing bad checks and committing fraud will put you in the crosshairs of that agency.
- Identity theft or suspected fraud. The use of accounts for illegal activities is not allowed.
Ways to get the ChexSystems report
It is always a good idea to verify that you do not have a negative banking history. This way you can make sure that the data is correct and that you have not suffered any identity theft.
By law, you have the right to request a free report once a year. To do this, you have four options:
- Apply online. Enter the website, follow the steps and in 5 business days you will have it.
- Use the fax. You just have to print the corresponding form, fill it out and send it to the number 602-659-2197.
- Call ChexSystems. You must contact the number 800-428-9623 and follow the instructions of the automated system for the report to be sent to you.
- Send your request by post. After the application is printed and completed, it is sent to this address: Chex Systems, Inc. Attn: Consumer Relations 7805 Hudson Road, Suite 100 Woodbury, MN 55125.
What to do if you are in the ChexSystems registry?
Once you have the ChexSystems report in your hands, you can verify the data to correct or take the pertinent actions.
Under the FCRA, no entity can retain negative information for more than 7 years (10 for bankruptcy). In fact, this agency deletes records after 5 years.
When correcting an error within the report, you must initiate a dispute as soon as possible. This can be done online, by mail, or by fax using an inquiry request.
This process can take 30 days or more, depending on the disposition of the bank or the information collected by ChexSystems.
In the event that you need to open an emergency checking or savings account and have a negative history, you can choose 2 alternatives:
- Prepaid card. They are plastic that you can recharge to carry out your operations and are not linked to an account.
- Second Chance Accounts. They are instruments with more restrictions, minimum balance, without overdraft protection and without plastics (debit or credit).