Chex Systems– What Is It?
Chex Systems is a consumer reporting agency (kind of like Experian or Equifax), that focuses on your banking history. ChexSystems is owned by EFunds, Inc., and provides a bank account verification service used by financial institutions such as banks and credit unions. Deposit account verification is simply a tool, used within the banking industry, to aid in the application process of new accounts. Banks use Chex Systemsto identify any potential “problem” applicants (people who have mishandled their accounts in the past).
Chexsystems flags “problem” accounts (or “mishandled accounts”). In particular, they flag bad activity that may be a cause for a bank to close a deposit account. Here are some examples: excessive overdrafts over a short period, fraud, debts owed to a financial institution, or false information given on an application. Each bank has its own policies defining account mishandling and the bad acts that may justify closing your account (and reporting you to Chex Systems).
Chex Systems reports contain a bunch of different types of information that can be used for banks to decide whether they will open a new bank account for you. Here are some examples of the types of information in a ChexSystems consumer report:
* If the applicant has an account closure on file
* Whether outstanding debts have been paid
* Validation of applicant’s social security information
* Validation and verification of applicant’s drivers license information
* Banks owed money by applicant (usually due to overdraft fees, ATM transactions, or automatic payments that were honored on insufficient funds)
* Multiple overdrafts within a short period of time
* Savings account, debit card or ATM abuse
* If the applicant has checks outstanding on the SCAN database (SCAN is a service used by retailers that keeps track of bank accounts and identification numbers from checks that have bounced)
* How many accounts the consumer has applied for in the past 90 days
* History of checks ordered in the past 3 years
Here are a few “Frequently Asked Questions” about ChexSystems:
(1) Do ChexSystems consumer report contain any positive information?
No. Chex Systems only keeps track of (and reports) negative information about you. Your ChexSystems report will only show negative information. This is unlike other Consumer Reporting Agencies (CRA) who often report both positive and negative activity in a consumer’s history.
(2) What if ChexSystems does not have a report on me?
If you do not have a ChexSystems consumer report, that means you either have no deposit account history or you are in good standings with current or previously used financial institutions. It’s probably a good thing to not have a ChexSystems consumer report.
(3) How do I get a copy of my ChexSystems consumer report?
ChexSystems reports can be ordered by mail, phone or fax. If you have been denied an account in the last 60 days, it is possible to obtain a report online.
(4) How much does a copy of my ChexSystems consumer report cost?
Under the Fair and Accurate Credit Transaction Act (FACTA) amendments added to the Fair Credit Reporting Act (FCRA), you are entitled to a free copy of your report once every 12 months.
(5) How fast are ChexSystems reports delivered?
Banks can access ChexSystems reports instantaneously by internet or phone. Consumer initiated reports are mailed within 5 business days.
(6) Do Negative Items stay on My ChexSystems consumer report Forever?
No. Each item reported to ChexSystems is kept on file for 5 years.
(7) How do I get a negative item removed from ChexSystems?
Negative items can be removed by the bank or credit union who submitted it to ChexSystems.
If there was an error by the bank, which led to a negative item being submitted, you can have the negative item removed if the error is proven to the bank. Banks can also remove a negative item if an outstanding debt is paid; however, banks are not obligated to remove accurate reports of account mishandling due to debts owed to the institution. Banks are required to mark the account as paid, if a collection amount is paid back.
(8) Can I dispute a negative item with ChexSystems?
Yes. Disputes regarding a negative item can also be filed with ChexSystems. When a dispute is received by ChexSystems, they must respond back to you within 30-45 days, depending on how you obtained the report.
After receiving your dispute, ChexSystems must verify your claim with the financial institution that submitted the report. If the disputed information can not be verified by ChexSystems, the information must be deleted from your report.
(9) Can I add information to my ChexSystems file?
Yes. You may add a brief statement to your ChexSystems file. To add a statement to your file, the statement must be written and signed with a clear indication that you would like it added to your ChexSystems report.
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