How To Get Approved For A Checking Account When You Are In ChexSystems
If you have attempted to open a checking account, but are constantly being denied, it is likely you are in ChexSystems. You may be asking, “What is ChexSystems?” ChexSystems is a reporting agency that you are probably not familiar with, but this agency has a lot of information about banking customers, as well as influence, on who gets approved for a checking account and who doesn’t.
ChexSystems, which is run by Chex Systems, Inc., ranks right up there with Experian, TransUnion, and Equifax credit reporting agencies in terms of its importance of whether a banking customer gets approved for a checking account or not. ChexSystems provides its financial institution members with account verification services to help identify banking customers who may have a history of mishandling their checking accounts in the past. This identifies to the banks who are greater risks of being approved for checking accounts now, which often leads to them being rejected for having their own checking accounts.
Chex Systems, Inc. is a consumer-reporting agency that is governed by the Fair Credit Reporting Act (FCRA). Whenever a banking customer has insufficient funds in his/her account or overdrafts his/her account, the bank may report the infraction to ChexSystems.
Most information that is reported to ChexSystems stays in the system for five years. The only ways that the information is removed sooner is when the bank that reported the infraction requests the infraction to be removed sooner or if applicable law requires ChexSystems to remove that infraction from a person’s record sooner.
It’s important to note that a banking customer can pay off a bank check that is listed in ChexSystems, such as an overdraft, but that the infraction will still remain in the ChexSystems’ database, so any mistake you make with your checking account will often stay on your ChexSystems’ record for five years.
Besides overdrafts and non-sufficient funds infractions, other information that ChexSystems collects include security freezes on a checking account and information that is reported by retailers through the Shared Check Authorization Network (SCAN). This network is a comprehensive database that identifies the bad check writers in the United States. A participating retailer can request a customer’s history of bad checks to see if it should accept a check from that customer or not.
If you have a history of overdrafts and non-sufficient funds infractions with previous checking accounts, you likely have had a hard time getting approved for a new checking account. All is not lost, however. There are banks that offer “second chance checking accounts” to people who have been in ChexSystems and even to people who are currently in ChexSystems.
Second Chance Checking Account
To obtain approval from a “second chance bank,” you will likely have to pay the ChexSystems amount in full, although if the amount is small or in the distant past, the bank may not require you to pay to gain approval for a checking account. These second chance banks will not use ChexSystems to determine whether to approve a checking or savings account in your name or not, but they may run a credit report to confirm your identity.
There are several banks that offer second chance banking which will allow you to open a checking account despite a present or past ChexSystems record. U.S. Bank has been one of the more favorable banks in terms of approving people for checking accounts while currently being in ChexSystems. Your best bet is to head to your nearest in-store branch and bring along proper identification and a utility bill that shows your address for the best chance of getting approved for a checking account while in ChexSystems.
If you have Woodforest Bank in your state, you can enter the nearest branch and apply for a “Second Chance Checking” account, which comes with unlimited check writing privileges and a debit MasterCard®.
BBVA Compass is another bank that offers a second chance checking account. This account will provide you with a Visa® debit card, unlimited check writing privileges, and no minimum balance. The drawback is that there is a monthly service charge of $11.95, along with a minimum $25 opening deposit requirement.
Upside – Works like a Checking Account
Another viable option for many people dealing with poor Checking Account ChexSystems report is the Upside Prepaid Visa®. This is a free direct deposit service that works like a checking account. You can write personal checks online by just logging into your account, clicking the “Write a Check” button, and filling out the name, address, and amount due. The check will then be debited from your prepaid account and sent to that person in the amount stated. This service approves everyone, so you certainly have this option no matter how poor your ChexSystems report is.
As you can see, you do have options if you have a poor ChexSystems record due to poor management of checking accounts in the past. It’s important to learn the mistakes you made with past checking accounts, such as providing insufficient funds to cover your expenses or overdrafting the account, to ensure that you don’t do that with your second chance checking account. By ensuring you know how to manage your checking account now, you will not only improve your ChexSystems record for the long term, but you’ll also be more likely to be approved for higher-quality checking accounts that provide greater benefits and more privileges in the future as well.