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January 26th, 2010

ChexSystems, also known as Chex Systems, Inc, is a Delaware based agency that keeps a database of individuals’ bank account history. ChexSystems reports individuals who close their bank accounts with a negative balance to credit agencies such as Equifax, TransUnion and Experian. Once you’re in the ChexSystems database you won’t be able to open a new savings or checking account at any other bank that uses ChexSystems, and 80% of banks use it.

If you don’t participate in fraud and only have bank accounts in good standing your name won’t be found in the ChexSystems database. The ChexSystems is only used to track fraudulent bank account usage. Sometimes banks will overlook an individual’s past if the infraction was minor. It’s up to each bank whether they want to open an account with someone in the ChexSystems database or not.

ChexSystems also attempts to collect money from individuals that leave negative account balances in their bank accounts. Not all banks use the ChexSystems collection agency, but some do. Some people have a problem clearing their name out of ChexSystems even after they have repaid their debts.

Banks are not required to report whether they have been repaid for an overdraft account so innocent names do exist in ChexSystems. However, if ChexSystems was the collection agency used, it will be noted in your file. You can order a report on yourself in the ChexSystems to see if you’re there and what infractions you have in your file.

Once you get the file you can settle up your debt. If you’re still in the ChexSystems database you should show proof that you’ve repaid your debt and send it to ChexSystems. There’s a good chance you can get your title cleaned if you’ve proven you’re innocence, but it may not always work.

If they are unwilling to change your file you’re allowed to attach a personal statement to your file for banks to view. It may be hard to convince a bank you were innocent if you couldn’t prove it to ChexSystems however.

personal finance

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