Blacklisted on ChexSystems – Steps to Take

Have you recently experienced a denial for opening a bank account? Perhaps negative reports on ChexSystems may have caused it. The fact is that many banks verify your worthiness as a customer when you request a bank account. If you have been blacklisted on ChexSystems by any chance, you may receive a denial for opening an account.

Negative reports largely influence the decisions of banks for account approvals. It’s a challenging time one has to suffer when they are unable to open a bank account. If you are also in a similar situation, keep reading below to learn what you can do when blacklisted on ChexSystems.

ChexSystems- What it is

We can describe ChexSystems as a tracking agency, whose primary goal is to keep an eye on one’s banking behavior. This system keeps a record of your banking profile and supplies it to numerous banks in the form of data.

Approximately eighty percent of the banks in America work with ChexSystems to know the banking behavior of the masses. This agency came into existence in 1971 and the FIS runs its operations.

FIS employs the subsidiary of ChexSystems to put together a detailed banking record of millions of Americans. Perhaps it wouldn’t be wrong to compare ChexSystems to the three credit bureaus that employ the credit scores technique.

The only difference with this agency is that instead of considering your creditworthiness, it pays attention to your banking risk. Perhaps the most intriguing thing about ChexSystems is that it is not as widely popular as the credit bureaus are. In fact, you may only come to know of this agency when you are blacklisted on it.

While no one enjoys a negative credit report, the unfortunate fact here is that the ChexSystems report does follow you around. If you approach any bank that works with ChexSystems, you must know that they will directly obtain your report. Hence, you may have a difficult time opening a checking account if you haven’t been on favorable terms with the agency.

ChexSystems- How the Agency Works

ChexSystems is always in possession of accurate and detailed reports on bank accounts that were closed for various reasons. Hence, it provides Intel to nearly 80% of banks in America. It facilitates them in the application process for savings and checking accounts.

This makes it quite easy to figure out why people can have difficulty gaining approval from banks of their choice. If their record is present in the ChexSystems agency, they could very well not experience a successful application procedure of opening an account.

Those who are blacklisted on ChexSystems come under the category of ‘accounts closed for cause’ under the agency. The meaning of the ‘For Cause’ term here encompasses a number of elements. Some of these include:

• Involvement in activities that violated banking regulations and rules
• Involvement in any kind of fraud
• Abuse of ATM transactions, debit card, and savings account
• Failure to pay overdraft or insufficient funds
• Providing false information for an account
• Cases of multiple bounced checks within a short timeframe

As we mentioned above, this list only includes certain elements and is by no means exhaustive. Hence, there could be various other reasons too for which ChexSystems could close your account. So, when the agency closes your account for any reason, they will also maintain its record in their database.

Opening a Bank Account- What you need to know first

Before you apply for opening a bank account, there are certain steps you need to take. First, check whether you had an account closed for various reasons, including excessive overdrafts, non-sufficient funds, and suspicion of fraud, etc.

You know, the main reason why one falls into conflict with the ChexSystem agency is overdue payments even after their account has closed. These could include fees for other services and overdrafts etc. A large number of unions and banks typically refuse to open an account and entertain individuals who have a history of overdue payments in their database.

In fact, the stigma from the past payment history sticks even when you later approach the banks with enough funds to open a new account. We could entirely attribute the ChexSystems to this because most banks largely depend on the agency for information on individuals.

If the banks come across information indicating a problematic relationship of a customer due to insufficient funds in the past, the bank refuses them. It’s nearly the same as getting a denial for a credit card due to poor credit history in the past.

Regardless of the improved financial status, you approach the banks with, they will still judge you on your previous banking history. Therefore, it’s highly likely to earn a denial for a bank account due to poor banking performance in the past.

Blacklisted on ChexSystems- Possible Reasons

 While there may be various reasons for getting blacklisted on ChexSystems, they will surely all relate to events of mishandling or handling records of a bank account. For instance, the most common reason for which we see people getting blacklisted from the agency is because of writing bad checks.

Some other common reasons include failure to meet overdraft fees payment deadline and high ratings on suspicions of fraudulent banking activities. But one can rest assured that unless there is a pattern of typical behavior, ChexSystems will not blacklist you.

However, if you consistently keep up with bad banking behavior, then you are bound to get blacklisted. When you overdraft even once, the agency immediately puts you on their radar. Moreover, if your bad banking behavior causes your account to close, ChexSystems will not only find out but their tracking records will have a severe impact on your future banking activities.

There is a reason why people emphasize the need to maintain a clean record with the agency. Once you get blacklisted, the future journey will be a problematic one for gaining approval on savings and checking accounts.

The bad news is that one bad report from the agency can continue to hound you for five years but there’s good news too. You can take certain measures to repair and correct your banking situation. Let’s learn about it in detail below.

Blacklisted on ChexSystems- What you can do

We mentioned how the impact of a negative report by ChexSystems can last for five years on your account opening activities. But five years is a long time and certainly not easy to wait that long just to obtain a regular checking account.

Hence, we are here to suggest some actions that might very well help you in improving your scores and improving your reputation at the agency. In fact, with these helpful measures, you may also manage to improve your scores enough to pull them over the threshold for opening a bank account.

Let’s take a look at the steps below:

Payment of outstanding fees or debts-

the best way to start atoning for your mishandling of accounts is to first pay off any outstanding debts or fees you may have. This approach will be especially beneficial in targeting the red flags that are unpaid debts and unpaid fees. You see, these are the first activities the agency will look at when assessing your trustworthiness as a customer. Now, this does not mean that the agency will let you off easily but at least trying to pay off the debts will be a start. In fact, by paying them in full, you will be in a better position with the agency to negotiate the improvement of your past records. Even if you cannot pay them in full, try negotiating for a portion of the debt you can easily pay. This will at least convince the creditors that you’re willing to make up. Once you reach a mutual agreement with your creditor, you can then request then to update your recent positive banking activity on ChexSystem.

Consumer Disclosure Report-

There are several similarities between ChexSystem and the three credit bureaus. One of which is holding copies of the consumer disclosure report, which the agency must provide you a copy of every twelve months. Hence, you could ask the agency to supply you a copy of your recent consumer disclosure report to review. This will help you analyze the reasons why you have such a low score on ChexSystems.

Dispute any incorrect errors you find-

Now it is highly possible for even smart agencies like ChexSystems to make errors in their database compilation. As a result, there could be certain erroneous scorings on your ChexSystem and FICO profile as well. By obtaining a copy of your consumer disclosure report you will know where you were truly wrong and where you have unjust accusations.

Dealing with your own mistakes is justified but having to deal with another’s is unfair. If you spot any erroneous information, do not waste time disputing it pronto. Here is how you may approach this dilemma:

you must start by collecting documentation for supporting your case

Next, you must visit the ChexSystem website and go to their dispute section

You have various options for submitting your dispute, such as online, over the phone, through email, or by fax.

ChexSystem will take note of your complaint, and will investigate and resolve the issue within a period of 30 days.

The other viable option is resolving the disputed information directly with the creditors. Once you reach a mutual agreement, you could ask your creditor to update your correct status and documentation of ChexSystems. You can also do it yourself.

Note that the steps we have mentioned above may not necessarily be enough to improve your negative database. If you have been blacklisted on ChexSystem for even graver reasons, it may take a lot more struggle to resolve the problem.

However, the above-mentioned steps are not a bad try. Moreover, obtaining information to verify the accuracy of the information on your report is also a good measure. At the very least, it will help you understand better what caused your scores to dip, especially if you had paid off your debts.

Banking Opportunities while Blacklisted on ChexSystems

From all you have read above, you’re surely fretting out right now if you are one with a negative banking record. But you do not need to lose heart just yet. Having a negative record does not completely eliminate the possibility of banking services for you.

There’s still hope and it’s important to stay optimistic. Doing so will improve your chances of not staying locked out of the banking system forever. Frankly, though, the situation doesn’t remain that bleak especially if you handle it smartly. For starters, you must first review your record on ChexSystems by asking for a copy of your report.

Then run a critical eye over it and look for every minute detail that categorizes as false information about you. If you catch any such things, it will help you dispute the misinformation immediately with the agency.

Next, you must apply for a second chance at opening a checking account. This will be a good attempt to salvage and rebuild your reputation as a worthy banking customer.  The only thing about such an account is you will have to make do with fewer features and lower limits. “Something is better than nothing”, so you will at least have some banking service to while away the five years.

Secondly, there are still a fair number of local credit unions that do not work with ChexSystems. Hence, you could try your luck with them. In fact, prepaid debit cards are a good option to apply for too.

Final Thoughts

Being blacklisted on ChexSystems is not the end of your banking opportunities. A negative report on the agency of your poor banking history can impact your application for accounts; there’s still hope.

You can take several measures to rebuild your reputation, improve your profile on ChexSystems, and avail favorable banking opportunities.