ChexSystems is a consumer reporting agency. Being in ChexSystems holds you back from opening a regular account with products and services available within a bank or credit union. Based on your past with banking, financial institutions, you have had an account with reported all mistakes made, such as bounced checks, to ChexSystems. ChexSystems then creates a record and score within its database. Now when you go to apply for an account, this record is checked, and the financial institution determines if they are willing to give you a chance to bank with them.
If you are in ChexSystems, there are some facts you need to know. Knowing these facts will help you avoid further mistakes and potentially get you out of ChexSystems as soon as possible.
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How is Your ChexSystems Score Determined
Under the Federal Fair Reporting Act, ChexSystems is a consumer reporting agency that is required to provide you your credit score when requested. This score is determined based on the information listed on your ChexSystems report. The score is subject to change as your record is updated over time.
When a creditor requests this credit score information from ChexSystems, it may look different based on what makes you eligible for their service. The consumer score ranges from 100 to 899; a higher score indicates lower risk to the creditor or bank. You can request your score by mailing or faxing the “Score Order Form” listed on their website.
Review Your Chexsystems Record If You Are Denied a Bank Account
If you just learned that you are in ChexSystems after being denied a bank account, don’t go applying for another one right away. It is best to start by asking the bank you were denied an account from for the information that contributed to your denial. The information provided may not list the full disclosure of your report. It is a good idea to go to the ChexSystems website and request your “Consumer Disclosure” record to review for accuracy and for any unresolved claims. You are allowed a free copy of your report once every 12 months.
Applying for and being denied multiple bank accounts in a short amount of time can cause your ChexSystems record to get flagged for suspicious activity. Having a record flagged with suspicious activity will make it harder to apply for a second chance checking account, which allows consumers to apply with ChexSystem records.
Don’t Rely on ChexSystems to Remove Your Record From Their System After 5 Years
How long does information stay on Chexsystems? Five years would be the commons answer you hear, but ChexSystems removal after 5 years is not guaranteed because these reports can be outdated and contain inaccurate information. If you owe money, then your record is going to remain open. And even if you have paid old balances off, financial institutions or other creditors are not obligated to remove account mishandling from your record. Financial institutions or ChexSystems may not prioritize your report removal even after the five years are up.
It is also necessary to pay past unpaid balances because it will show that you took care of your old debts and allow you to apply for other second chance checking options while you wait to have your ChexSystems report cleared after the five years. Be sure to request your ChexSystems record every 12 months to review for outdated and inaccurate information. Dispute claims on your record if necessary. You can get more information on how to do this on their website. You can read more about Chexsystem removal here.
Does Bankruptcy Clear ChexSystems? Filing Bankruptcy Can Remove You From ChexSystems
If you have an old debt with a financial institution that was included in a bankruptcy, you will need to start a dispute to have it removed from your ChexSystems record. The first step is to obtain a copy of your ChexSystems record; you are entitled to a free one after bankruptcy. When requesting the record, you will want to attach your bankruptcy discharge paperwork as documentation. A discharge should arrive about 3 months after a Chapter 7 has been filed or about 3 to 5 years if you filed a Chapter 13.
Your record should show balances as paid or resolved with bankruptcy. If the file is incorrect, then it is necessary to start the dispute process with ChexSystems. You can dispute with their online form, or by mailing or faxing the “Request for Investigation” form. ChexSystems has about 30 days to complete their investigation. During this time, they will review your dispute and documentation while contacting the business responsible for the information contained on your record.
If the investigation does not come through, you may be able to sue ChexSystems or the business for violating the Fair Credit Reporting Act.
If You’re in ChexSystems, Your Information Can Be Sold
When you end up in ChexSystems due to your past banking mistakes, the information contained within their system can be utilized by credit grantors. Credit grantors will add you to their mailing lists and use your information to send out pre-approved credit or insurance offers. Receiving pre-approved credit offers may be unnecessary while you are rebuilding your credit and can put your information at a higher risk for identity theft if someone were to get ahold of your mail.
To opt-out of pre-approved offers of credit or insurance, you can submit an opt-out request online. This request will remove you from the mailing lists tied through ChexSystems for a period of five years. You can also request for permanent removal from pre-approved offers by mailing the ChexSystems “Permanent Opt-Out Election Form.” If you’re still having troubles it’s always handy to have an online checking account with no Chexsystems.
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