Denied a Bank Account? It May be Due to Your ChexSystems Report

Posted by Viviana Vazquez in BankingMay 30, 2021(Last Updated December 28, 2022)•2 min read

Key Takeaways

ChexSystems is a nationwide specialty consumer reporting agency under the federal Fair Credit Reporting Act (FCRA).
Banks use your Chex report to determine whether or not to approve your application when opening an account.
Typically, negative marks remain on your ChexSystems report for five years.

Are you ready to make some real money moves?

Think of this scenario: You applied for a bank account, but your application gets denied. Then, a few weeks later, you receive a packet in the mail that includes your ChexSystem FACTA report explaining the reason for the rejection.

So what exactly is the ChexSystem Report, and how does it work?

According to ChexSystem.com, "Chex Systems, Inc. (ChexSystems) is a nationwide specialty consumer reporting agency under the federal Fair Credit Reporting Act (FCRA)." ChexSystems keeps records of those who misused or abused their past bank accounts, including bouncing a check, failing to pay overdraft fee(s), or suspected fraud or identity theft.

Here's a breakdown of what that means for you:

A. Think of your ChexSystem Report as a credit report for bank accounts. Banks use your Chex report to determine whether or not to approve your application when opening an account.

B. Click here to obtain your free FACTA annual report. You can request your report by submitting an online request, voice message, mail, or fax.

C. Typically, negative marks remain on your ChexSystems report for five years.

D. Once you receive your report, you have the right to dispute any errors if you spot any mistakes.

Not all hope is lost if you are denied a bank account due to your ChexSystem report. Some banks offer second-chance bank accounts, or you can use a pre-paid card option.

More than 80% of banks and credit unions check ChexSystems to determine if an applicant is a desirable and trustworthy potential banking customer. On the other hand, numerous banks, including neobank CapWay, do not use ChexSystems when you apply for an account.