How to Get Around ChexSystems

Chex Systems Inc., which is owned by Deluxe Corporation, is a network that is comprised of member financial institutions that regularly contribute information on mishandled checking and savings accounts to a central location. ChexSystems shares this information among member institutions to help them assess the risk associated with opening new accounts. The company has said that it only shares information with member institutions and does not decide whether or not the institution will approve or decline a new account. Many people have found themselves in Chexhell due to an oversight, but the punishment is harsh because once in ChexSystems, the record lasts for 5 years. Their database keeps track of negative information regarding checking and savings accounts. The negative information usually consists of non-sufficient-funds activity and unpaid overdrafts. Many banks will not grant a new account for someone in ChexSystems, but some will approval a new application once it has been paid and you have proof from the institution. There are a handful of banks and credit unions that do not use ChexSystems, but use the credit bureaus such as Equifax, Experian and Transunion to approve or decline accounts.

Instructions

Difficulty: Moderately Challenging

Things You’ll Need:

• Social security number
• Drivers' license
• All account holders' names
• Opening deposits

1. Do not close any other checking and savings accounts you may own and keep the accounts positive. Pay all overdraft fees as soon as possible.
2. Once you have paid the overdraft fees and have satisfied the bank that reported you, insert a short explanation into your ChexSystems file, first by requesting your report, and then by writing a note on the dispute form. You can either fax it to ChexSystems or mail it directly.
3. Try, try again. Bank and credit union managers have the option to override ChexSystems by opening the account, but the reason must be a compelling. One of the products that ChexSystems offers is Audit Check, which tracks cases in which managers overrode a negative report and let a manager open the account anyway. Sometimes upper management does not look favorable on this and the practice is discouraged.
4. While approximately 80 percent of banks and financial institutions use Chexsystems, there are a few that do not. For example, many credit unions such as Pentagon Federal Credit Union and Navy Federal Credit Union do not use Chexsytems, but many will grant savings accounts no matter what your Chex record looks like. One can also look towards brokerage firms for cash management accounts that come with checkwriting features. For example, Franklin Templeton offers a money market account that comes with checkwriting privileges and a debit card. Merrill Lynch offers a similar account and they also do not run a Chexsystems report. Transportation Alliance Bank located in Utah also offers checking accounts and do not run Chexsystems.

Tips & Warnings

• If you are granted a second chance, make sure you keep your account positive and make regular deposits to the account. Times have changed in the banking industry and banks and credit unions are competing for your business. They do not want to turn you down, but they do not want to entrust a low-margin product to a high-risk consumer.
• A small number of banks, such as Wachovia, have granted accounts only to go back and close them after Loss Prevention takes a look at the ChexSystems record.