How to clean up your ChexSystems record

Negative marks can prevent you from opening a bank account

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If your application to open a bank account was denied, you might want to check your ChexSystems report, which is a record of your banking behavior.

Luckily, if you’ve made some banking missteps in the past, there are ways to improve your ChexSystems record.


Key insights

  • ChexSystems is a consumer reporting agency focused primarily on checking and savings accounts. A negative ChexSystems record can adversely affect your ability to open a bank account.
  • You can dispute errors in your ChexSystems report.
  • Second chance checking accounts are available to those whose ChexSystems reports might disqualify them from opening traditional checking accounts.

What is ChexSystems?

ChexSystems is a consumer reporting agency. It’s similar to the three big credit reporting agencies (Equifax, Experian and TransUnion); however, instead of reporting your credit use, ChexSystems tracks and reports your bank account activity.

Banks and credit unions use the information from ChexSystems to identify irregularities in previous banking relationships, explains Matt Bundrick, co-founder of the personal finance site BankBonus.com.

“Bouncing a check, negative balances, even the frequency at which accounts are opened and closed can have a negative impact on your ChexSystems report when being considered for a new checking or saving account,” he said.

» MORE: How to check your credit score

4 steps to clearing your ChexSystems record

Request your ChexSystems report
Your first step to improving your ChexSystems record is to get a copy of your report. This will help you understand why your bank account application was not approved. You are eligible for a free report every 12 months, and requesting a copy will not impact your credit score .

To get your free copy, you can visit the ChexSystems website and submit a request online. Alternatively, you can call 800-428-9623 or mail your request to:

Chex Systems, Inc.
Attn: Consumer Relations
P.O. Box 583399
Minneapolis, MN 55458

Bundrick says the easiest and fastest way to obtain a copy of your report is online. Paper copies are usually delivered within five business days.

Dispute any errors
Once you receive your report, carefully review it for any fraudulent or inaccurate information. If you spot an error, you can file a dispute directly with the source of the information. You can also have ChexSystems contact the source on your behalf to initiate the dispute process. This process is known as a reinvestigation.

A reinvestigation is typically completed within 30 days for most consumers; it will typically be completed within 21 days for residents of Maine. While you don’t have to submit supporting documents with your dispute, you can do so if you think it will help. Supporting documents might include a police report, account statement or paid-in-full letter.

If you provide additional documentation after the reinvestigation has started, this can extend the reinvestigation time frame by up to 15 days. ChexSystems will inform you of the results once the reinvestigation is complete.

Settle your debts
If all the negative marks on your report are legitimate, you’ll want to pay off any outstanding debts, such as unpaid overdrafts or bank fees. If you can afford to pay your debts, do so. Ask the financial institution you owed money to for written confirmation once the debts are repaid, and save that confirmation for future reference.

If you can’t afford to pay your debt, you can try negotiating with a financial institution to settle for less than you owe. Debt settlement companies are fee-based third parties that can negotiate on your behalf if you’re worried about doing this on your own.

You could also seek out a debt management plan (DMP) from a credit counselor. With a DMP, you’ll still owe the full amount of the original debt, but the counselor may negotiate lower interest rates or fees to help you pay the debt off faster.

Update your information
After you’ve paid off your debt, ask the financial institution to contact ChexSystems and request that the negative information be removed from your report. It’s a good idea to communicate with the financial institution in writing, either through email or traditional mail, to ensure you have a paper trail.

Note that the institution isn’t obligated to ask for the information to be removed entirely, but it must at least inform ChexSystems that your report should be updated to reflect the paid debt. A paid debt may be viewed more favorably than an unpaid debt when other financial institutions review your future bank account applications.

Once your ChexSystems report is updated, you can request a copy for your files.

Opening a bank account without a ChexSystems check

If you can’t afford to pay off your debt, you’ll have to wait for the information to fall off your ChexSystems record. Reported information typically remains on your ChexSystems record for up to five years.

In the meantime, you can look into a second chance checking account. Second chance accounts are designed for people who can’t qualify for a traditional bank account. When you apply for a second chance bank account, the financial institution either doesn’t perform a ChexSystems check or is more lenient regarding past mistakes.

Second chance bank accounts may charge monthly fees and may not offer all the services associated with a traditional checking account. For instance, you might not have access to overdraft, and your account might have monthly transaction limits.

» MORE: 10 questions to ask before opening a checking account

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    FAQ

    How long does a negative mark stay on your ChexSystems report?

    Negative information typically remains on a ChexSystems report for five years. Under the Fair Credit Reporting Act, some negative information can be reported for up to seven years.

    Does ChexSystems affect your credit score?

    Your ChexSystems record does not directly affect your credit score. However, if you have a bank account debt that’s been sent to collections, the agency might report this information to the credit bureaus, which can impact your credit score.

    How do I know if I’m in ChexSystems?

    You might not know you’re in ChexSystems until your application for a bank account is denied. If that happens, you can request a free copy of your ChexSystems report to see if you are listed. You are eligible for one free copy of your report every year.

    Bottom line

    If your application to open a bank account is denied, you may have negative information on your ChexSystems record. In that circumstance, you should request a free copy of your ChexSystems report. If you find errors in the report, you can file a dispute in an attempt to have the errors removed. If your report accurately lists outstanding debts, you can pay the debts off so that your ChexSystems report will be updated. Alternatively, you can wait five to seven years for the negative information to fall off your record.

    Not having access to a bank account can make it difficult to cash checks, pay bills and manage your money. If past financial mistakes are preventing you from opening a traditional bank account, you can use a second chance bank account while you take steps to repair your ChexSystems record.


    Article sources
    ConsumerAffairs writers primarily rely on government data, industry experts and original research from other reputable publications to inform their work. Specific sources for this article include:
    1. ChexSystems, “ Consumer Disclosure ." Accessed April 18, 2023.
    2. ChexSystems, “ Dispute .” Accessed April 26, 2023.
    3. Office of the Comptroller of the Currency, " How long does negative information stay on ChexSystems and/or EWS consumer reports? ” Accessed April 18, 2023.
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