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You probably know that not paying a credit card or loan will show up on your credit report and make it difficult to obtain credit in the future, but did you know that mismanaging your checking or savings account could negatively affect your banking options? While checking and savings account activity does not appear on your credit report, most financial institutions report misconduct to a database called ChexSystems. Types of activity that may be reported to ChexSystems include:
Information can stay on your ChexSystems report for five years. If you owe an outstanding debt, paying it does not get it removed from your report early (unless the financial institution voluntarily deletes it), although your report will show that it was paid.
Positive information is generally not reported to ChexSystems. If you have never had any incidents of mismanagement, you probably do not have a ChexSystems report.
When you apply to open a checking or savings account, most financial institutions will run your name in the ChexSystems database to see if you have a report. Some financial institutions may deny everyone who has a ChexSystems report, while others may only deny people with certain types of activity. ChexSystems itself does not approve or deny applications - it merely provides reports to financial institutions.
If you are denied an account due to having a ChexSystems report, that does not necessarily mean you are doomed to keeping your money under your mattress. First, ask to speak to the branch manager to see if there are any steps you can take to get an account. If you owe money to your previous financial institution, paying it may do the trick. Some financial institutions will also give approval if you take a course on account management. If the financial institution is unable to give you an account under any circumstances, shop around. Some financial institutions don’t check ChexSystems or have second chance accounts specifically for people with a ChexSystems report. Credit unions in particular are often more forgiving of a ChexSystems report. As a last resort, you may be able to get a prepaid debit card. You can have your paychecks directly deposited onto the card and use it at any place that accepts regular debit cards.
Consumer reporting agencies, including ChexSystems, are regulated by the Fair Credit Reporting Act and Fair and Accurate Credit Transactions Act. Below are some of the important rights these laws give you:
Chex Systems, Inc.
7805 Hudson Road, Suite 100
Woodbury, MN 55125
(800) 428-9623 www.consumerdebit.com
© Balance www.balancepro.org · (888) 456-2227
For a no-cost consultation, contact a UFCU CFS Investment Representative by phone or email.
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