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What Is Chexsystems and How Does It Impact Your Banking Services
26 May 2021 | 0 comments | Posted by Andy Lewis in Money Talks
Whenever you consider opening a new bank account, the work of Chexsystems is bound to cross your eyes at one point or another. This makes many new customers wonder what Chexsystems is, how it works, and why Chexsystems is so essential to banking.
In a nutshell, Chexsystems is a reporting agency that collects the financial information of users and compiles it in the form of a record that could be utilised by banks and credit unions when you apply for a new checking account.
Did you know?
Chexsystems reporting agency is affiliated with Fidelity National Information Services. This company provides the technology and software that Chexsystems need to operate successfully. Let’s dig deeper!
Items you will find on your Chexsystems report
Typically, the report would highlight your accounts, involuntary account closures, unpaid negative balances, bounced checks, overdrafts, suspected frauds, penalty charges, ATM abuse, identity theft, and report abuse, if any.
This record is quite elaborate and helps banking authorities to decide whether they should accept or reject your application. Although you can apply for an online checking account with no Chexsystems, it is a risky plan for your financial life to have a poor Chexsystems report.
Please note!
Many customers confuse Chexsystems report with a credit report provided by credit bureaus. Keep in mind that the two are entirely distinct and mentioned different aspects of a user’s financial life. A credit report maintains a credit history of how you have dealt with payments and debts. On the other hand, the Chexsystems report mentions any problems you might have had with different account holders.
Why is it not a good idea to go for Second-chance banking?
Second chance banking or opening a checking account in a bank that does not use Chexsystems is an option for people who can not score approval from a regular bank.
As much as that can be helpful, there are several drawbacks associated with owning a Chexsystems report in poor shape.
For example, most second chance bank services come with high charges and only provide limited features. Since they are designed for people with shaky banking history, their terms are often strict and non-flexible.
Moreover, second chance banking does not allow you to overdraft, access checks, or make direct deposits.
Is there anything you can do to improve your Chexsystems report?
By now, you can understand the dire need for fixing your Chexsystems record if they are currently in poor shape. Luckily, there is a lot you can do to clean up your report.
The first step is to obtain the report from the relevant agency. You can avail of a free report once in 12 months wither by visiting the consumer reporting agency’s official website or calling 800-428-9623. There is also a request form available for download on their website. You can complete it manually and post it to the following address:
“ChexSystems Inc., Attn: Consumer Relations, 7805 Hudson Road, Suite 100, Woodbury, MN 55125”
Once you have the paper in your hands, the next task is to identify any information that might be wrong and have these negative items removed immediately.
Moreover, if the report shows some pending due, then you can clear the balance and have it taken off the record. Keep in mind that reporting agencies can take up to 30 days to assess, analyse, and then remove an item per request, so be patient!
Take-home message
Everyone wishes to enjoy financial independence without the fear of getting denied by the next bank they apply to. Therefore, it is essential to review your Chexsystems report regularly and improve your financial life, bit by bit.
If nothing else works out, it is a relieving piece of news to know that the options of second chance banks account and prepaid debit cards still stand. You can use them wisely to improve your relationships with banks and then apply for a regular bank account later on.
The bottom line is that Chexsystems, as well as credit reports, can take a while to reach a good standing. It is all about the amount of effort that you are willing to put in!
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Recommended reading
If you enjoyed this post and have a little extra time to dive deeper down the rabbit hole, why not check out the following posts on small business finance.
- Alternative Funding Solutions a Small Business Needs to Know
- Common Finance Mistakes South African Small Businesses Make
- Where To Get Small Business Loans In South Africa
- 5 Tips for Funding Your Small Business
- 4 Types of Quick Business Loans for Immediate Funding
- How South African Small Businesses Waste Money
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Tags: Banking, Guest Post
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