When you want to borrow money, lenders will check your credit to see if you’re a reliable borrower.
Similarly, if you want to open a checking or savings account, banks will look at another report: your ChexSystems report.
ChexSystems is a consumer credit reporting agency. It was created under the federal Fair Credit Reporting Act.
The agency collects information about closed checking and savings accounts, and reports that information to banks, credit unions and certain other entities that request it.
most people only find out they have a ChexSystems report if they’re rejected for a bank account
What Are Banks on the Lookout for in a ChexSystems Report?
Banks and credit unions are looking for irregularities in previous banking relationships
things like overdrafts, bounced checks, negative balances and even frequency at which accounts are opened and closed
The good news is that if you had a mistake in the past, it won't necessarily work against you.
Many people have accidentally overdrafted their account or bounced a check before
What Are Your Options if You're Denied an Account Because of ChexSystems?
If you're denied a bank account because of a negative ChexSystems report, you have a few options
First, you can look for banks that don't use ChexSystems reports. This may limit your options, though.
Another option is to ask the financial institution if they offer a second-chance checking account, which is a special account that some banks offer to those with blemishes on their credit report/ChexSystems report
second-chance accounts can have higher fees than traditional bank accounts
So make sure to read the fine print before signing upStill, a second-chance account is almost always a better option than expensive prepaid debit cards or check-cashing services.
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