What is ChexSystems & What If You Are Blacklisted? - Self. Credit Builder. (2022)

If you’ve had trouble managing money in the past, it can be difficult to turn the ship around. You probably know that a poor credit score can lead to being denied credit, but you might not be aware of another consumer report that can prevent you from even opening a checking account.

It’s called a ChexSystems consumer report, and getting blacklisted by this reporting agency can create a big obstacle to getting your finances back on track. If you are looking to improve your banking history or open a new bank account, this article can help.

In this article:

  • What is Chexsystems?
  • How do you access your ChexSystems report?
  • Your ChexSystems consumer score
  • What does it mean to be blacklisted by ChexSystems?
  • Does your ChexSystems record affect your credit score?
  • How do you clear your ChexSystems record?
  • Banking options for people with a poor ChexSystems score
  • How to avoid being blacklisted by ChexSystems

What is ChexSystems?

ChexSystems is a consumer reporting agency. It’s similar to credit reporting agencies like Experian, Equifax, and TransUnion, but instead of tracking your use of credit, ChexSystems tracks your checking and savings accounts with banks and credit unions.

ChexSystems maintains reports on consumers that includes information on:

  • Account closures
  • Bounced checks and overdrafts due to insufficient funds
  • Unpaid negative balances
  • Account, debit card, and ATM abuse
  • Account inquiries and applications for other bank accounts
  • Unpaid fees, including overdraft fees
  • Suspected fraudulent activity and identity theft

ChexSystems generally keeps negative banking activity on your record for up to five years. You can check out this sample ChexSystems report for an idea of what your consumer disclosure report will look like.

How do you access your ChexSystems report?

By law, you can request a free copy of your ChexSystems report once per year, or anytime your ChexSystems consumer report has been used to deny your application for a new account. You’ll generally receive the report via mail within five business days.

(Video) Denied For A Bank Account? - ChexSystems Explained

Your Chexsystems consumer score

ChexSystems also turns the information on your report into a score. Unlike credit scores, which range from 300 to 850, ChexSystems reports scale from 100 to 899. The higher your score, the better. You can also directly request your ChexSystems score from ChexSystems.

Many banks and credit unions use a ChexSystems report and score to determine whether to allow you to open an account with them. However, the criteria they use when evaluating your ChexSystems report differ from institution to institution.

Does your ChexSystems record affect your credit score?

Luckily, your ChexSystems report won’t have a direct effect on your credit score. Despite this, keep in mind that if you have been rejected for a checking or savings account and have negative information on your ChexSystems report, it reflects that you’ve had past difficulties that can also impact your credit history.

Just be sure to check your credit regularly to ensure your balances and everything else is in good order. Doing so will be good for both your credit score and your ChexSystems record.

What does it mean to be blacklisted by ChexSystems?

If you’re unable to get a bank account, it’s likely because you’ve been “blacklisted” by ChexSystems. But it’s not as though ChexSystems has a list of names that banks consult when evaluating an account application. Instead, being blacklisted effectively means that you have a poor ChexSystems score, and that can be tough to overcome.

How do you clear your Chexsystems record?

With a credit score, the credit rating agencies take into account positive information as well as negative information. So you can rebuild your credit score by taking actions such as paying off debt and making your credit card and loan payments on time.

It’s not so easy to rebuild a poor ChexSystems score. Since the company only tracks negative information about your deposit accounts, the only way to improve your ChexSystems score is to contact Chexsystems to dispute errors or wait until the negative information ages off of your report.

(Video) what banks do not use chex system

The good news is, not all financial institutions pull reports from ChexSystems. If your ChexSystems report has prevented you from opening a bank account, you still have options.

Banking options for people with a poor ChexSystems score

According to the National Consumer Law Center, over 80% of banks use reports like those available from ChexSystems and its competitors, EWS and TeleCheck, to decide whether to allow a consumer to open an account.

If you have a negative report, here are some alternatives to consider:

Apply at a non-ChexSystems financial institution

Several banks don’t use ChexSystems to approve or deny account applications. This includes national and online banks like Chase, TD Bank, BBVA Compass, and Chime Bank. You might also have luck with local banks and credit unions in your area.

Apply for a second chance bank account

Many banks and credit unions offer second chance bank accounts to help people who’ve had trouble managing their finances in the past get back into the banking system. These accounts tend to come with higher monthly fees and fewer perks than traditional checking accounts, so be sure to read the fine print before you sign up.

U.S. Bank and BancorpSouth are a few options for second chance checking accounts.

Use a prepaid debit card

If you primarily make electronic payments, consider getting a prepaid debit card and making payments from money you’ve already loaded onto the card.
You can purchase or reload cards at many retail stores and financial institutions. But watch out for fees.

(Video) No Fee Second Chance Checking Accounts 2022 | No Chexsystems | No Early Warning System

Prepaid cards can charge fees each time you reload the card, use an ATM, make purchases, check your balance, have a transaction declined due to an insufficient balance, or charge a monthly fee just for using the card.

How to avoid being blacklisted by ChexSystems

The best way to avoid being blacklisted by banks and financial institutions is to manage your checking account responsibly. The following tips come directly from the ChexSystems website:

1 - Know your account balance

“If you regularly balance your checkbooks, you’re less likely to write a check for more money than you have available in your account. When balancing your checkbook, be sure to subtract all debit and ATM transactions (and applicable fees) in addition to any checks you’ve written,” ChexSystems advises.

More and more, today’s checking accounts have automated this process if you manage your account online or through your bank’s mobile app. Aside from checking in on your balance regularly, opt into any alerts that can help keep you on track.

For example, set up low balance alerts if your account drops below a minimum balance. Set payment reminders at least a few days in advance for any upcoming payments so you can deposit money into your account or reschedule a payment to avoid overdrafts.

2 - Review your bank statement monthly

“It only takes a minute, but it can save you hours of trying to track down mistakes and missed entries,” ChexSystems advises.

Each month, review your bank statement to make sure there are no errors or duplicate charges. There are also plenty of budgeting apps available that can help you track spending. That way, you don’t have an overlooked error that could result in insufficient funds.

(Video) If you have been denied from opening a bank account...How to break out of chexsystems jail

3 - Check your account balance regularly

While reviewing your complete bank statement on a monthly basis is important, you should also check your balance online, at an ATM, or over the phone regularly. You can also set up transaction alerts at many banks that will text or email you each time a transaction is made on your account.

That way, you can spot and report any fraudulent activity immediately.

4 - Familiarize yourself with your bank’s fees and policies

Some banks charge monthly maintenance fees, so ask about those fees before you sign up or look for a bank that doesn’t charge them. Also, find out how your bank processes checks. Some banks process the largest checks first. This increases your chances of bouncing a check and incurring higher fees, since if the first check of the day bounces, all checks processed that day will bounce as well.

5 - Don’t float checks

Some people “float” checks by writing a check before the money is available, counting on the delay between when the check is written and when it clears the account. With the increased use of electronic check processing, float time has been virtually eliminated. Wait until the money is available in your account to write a check.

6 - Be on the lookout for Identity Theft

Monitoring your statements and transactions regularly can help you spot identity theft early on. Protecting your personal information can also help. For example, never give your social security number out to anyone.

Another example? If someone close to you used your Social Security number to open accounts in your name before you turned 18, consider doing a ChexSystems dispute for these accounts on the basis that you were not of a legal age to open a checking account in your own name. Do not let another person’s misuse of your financial information ruin your financial health, or prevent you from being able to bank.

Final thoughts

Being denied a bank account due to your ChexSystems report or score isn’t the end of the world. But understanding how the system works and what you can do to overcome it can help you get back on the road to better money management.

(Video) HOW TO SEE IF YOUR CREDIT PROFILE IS IN CHEXSYSTEMS? + THE CREDIT GAME UPDATE

About the author

Janet Berry-Johnson is a Certified Public Accountant and freelance writer with a background in accounting and insurance. Her writing has appeared in Forbes, Freshbooks, The Penny Hoarder, and several other major outlets. See Janet's profile on LinkedIn.

About the reviewer

Lauren Bringle is an Accredited Financial Counselor® with Self Financial– a financial technology company with a mission to help people build credit and savings. See Lauren on Linkedin and Twitter.

FAQs

How can I pass ChexSystems? ›

5 Steps to Clear Up Your ChexSystems Record
  1. Request your report.
  2. Dispute errors.
  3. Pay off debts.
  4. Ask creditors to remove information.
  5. Wait until the record drops off the database.
3 May 2019

How do I get my name off the blacklist? ›

The National Credit Act (Act 34 of 2005) stipulates that if you were blacklisted and have paid the debt for which you were listed, you may apply to the credit bureau where you were listed to have your name removed from that list. This can be done by applying for the cancellation of that blacklisting.

What does ChexSystems look at? ›

ChexSystems keeps track of your deposit accounts with banks and credit unions, and creates a report with that information to show your account activities and the reasons your past accounts have been closed.

Can I open a bank account after being blacklisted? ›

Some banks and credit unions offer what are called “second chance” checking accounts. These typically offer fewer features and higher fees than regular bank accounts to customers who have been blocked by a ChexSystems report or score.

How long does blacklist last? ›

This type of listing usually reflects for up to 5 years or until the court rescinds the order.

How long does it take ChexSystems to clear? ›

How Long Does a Report Stay on File? If there's an item on your ChexSystems report that you can't have removed manually, it usually takes five years for it to fall off your report on its own. Unfortunately, this may limit your options to second-chance bank accounts and prepaid debit cards.

How do you know if you're blacklisted? ›

Ways to check if you're on a blacklist
  1. Hire a company to check what your references and prior employers are saying. ...
  2. Speak with your previous manager to find out if you're on the company's do not rehire list. ...
  3. Speak with the recruiting firms you have worked with.

Does blacklisting still exist? ›

Blacklisting was, in essence, an informal term used to indicate negative information on someone's credit report. It was widely used during a time when only negative data would be collected by bureaus. But the term is now obsolete.

How long does a Judgement stay on your name? ›

A judgment remains on your credit record for 5 years or until it is paid in full or a rescission is granted by the courts. Although not always the case, in general a consumer is listed as defaulting before a credit provider applies for a judgment.

Can I open a bank account if I'm in ChexSystems? ›

When you apply to open a checking or savings account, most financial institutions will run your name in the ChexSystems database to see if you have a report. Some financial institutions may deny everyone who has a ChexSystems report, while others may only deny people with certain types of activity.

Which banks do not use ChexSystems? ›

19 Banks That Don't Use ChexSystems
  • TD Ameritrade. TD Ameritrade doesn't use ChexSystems to screen applicants, although opening an account is subject to a soft credit pull. ...
  • Axiom Bank. ...
  • Woodforest National Bank. ...
  • GTE Financial. ...
  • Southwest Financial Federal Credit Union. ...
  • Green Dot. ...
  • Wells Fargo. ...
  • Capital One.
7 Jun 2022

Do credit cards check ChexSystems? ›

Again, ChexSystems only collects information relating to closed bank accounts. It doesn't track information about active bank accounts or credit accounts, such as credit cards, loans, and lines of credit. ChexSystems only furnishes information; it does not actively approve or decline bank accounts.

What happens if you get blacklisted? ›

What Happens When a Person Is Blacklisted? Blacklisting is intended to deprive a person of the ability to make a living. Professional ties are cut. The person's reputation and status in the community are damaged.

What happens if a bank closes your account for suspicious activity? ›

If a bank closed your account due to suspicious activity, it must file a Suspicious Activity Report with federal law enforcement agencies and the Department of the Treasury. If this happens, your chances of opening an account at another bank are non-existent.

What do you do if no bank accepts you? ›

If you are unable to open a new bank account, here is what you should do.
  1. Ask the bank to reconsider. ...
  2. Get a copy of your report. ...
  3. Check your report for errors. ...
  4. Clean up your report. ...
  5. Look into getting a 'second-chance account'

Is blacklisting illegal? ›

These Regulations make it unlawful to compile, use, sell or supply a 'prohibited list' – a blacklist.

What is the difference between blacklisted and debt review? ›

If you are blacklisted and you decide to apply for debt review, your credit report will most likely already be negatively affected and may take a few years to restore to normal. But unlike being blacklisted, debt review will be removed from your name as soon as you've settled all your debt.

What did it mean to be blacklisted? ›

Definition of blacklist

(Entry 1 of 2) 1 : a list of persons who are disapproved of or are to be punished or boycotted. 2 : a list of banned or excluded things of disreputable character a domain-name blacklist … helped the government keep marijuana on the blacklist.—

What is a second chance checking account? ›

A second-chance checking account is an account where the bank or credit union either doesn't check your ChexSystems report or is willing to look past your previous missteps.

Can I open another bank account if I owe another bank? ›

There's no hard and fast rule that says you can't open a bank account if you owe a bank money. But since many banks check credit reports and bank consumer behavior reports in order to avoid risky customers, doing so can often be difficult unless you open an account geared toward people in that situation.

Does Wells Fargo use Chexsystem? ›

Even though Wells Fargo doesn't use ChexSystems for its checking accounts, it does use Experian reports. Apart from banking services, Wells Fargo offers a wide range of financial products like credit cards, loans, and investment services.

What does it mean to be blacklisted by the government? ›

countable noun. If someone is on a blacklist, they are seen by a government or other organization as being one of a number of people who cannot be trusted or who have done something wrong.

Is my address blacklisted? ›

There's no such thing as a blacklisted address. And there definitely isn't a long list of addresses somewhere that lenders check when deciding whether to lend to you or not. The fact is that it doesn't matter who has lived at your address in the past.

Is my email blacklisted by Gmail? ›

Run a Free Blacklist Check

If you are being blocked by Gmail, your email will be rejected with a “421” or a “550” SMTP error. “421” errors indicate temporary blocks and mail servers attempting to resend the emails.

Can a debt be written off? ›

If you apply for an administration order, you may be able to have some of your debt written off. This is called a composition order. You can ask the judge for a composition order or the judge may decide to give you one after looking at your financial circumstances.

Do companies have hiring blacklists? ›

Some companies have maintained an actual list of names — a blacklist — of people they never, ever want to hire. This is an illegal practice in nearly every state.

How do I dispute a blacklist? ›

If your application for credit is refused or you have a bad credit rating, find out the name of the credit bureau which gave a report about you. Check if the information is correct. If it is not, contact the credit bureau and lodge a dispute. The credit bureau must give you a reference number.

Is it true that after 7 years your credit is clear? ›

Highlights: Most negative information generally stays on credit reports for 7 years. Bankruptcy stays on your Equifax credit report for 7 to 10 years, depending on the bankruptcy type. Closed accounts paid as agreed stay on your Equifax credit report for up to 10 years.

Can I get credit if I have a Judgement? ›

A court can only order a judgement against your name if you do not take steps to resolve the matter after you have been sent a Notice of Default and a summons. Once a judgement has been issued against you, it may be very difficult getting approved for any new credit in the future.

Can I get a car loan with a Judgement against me? ›

You might struggle to get a loan if you have a judgment or payment default in your name. You typically won't be able to qualify for a loan from a bank or a traditional lender, or if you do manage to get vehicle finance, the interest rates will typically be very high.

What's the easiest bank to open an account with? ›

The 8 Easiest Banks To Join
  • Chime. Chime1 is probably the easiest to join. ...
  • TD Bank. To sign up with TD, users can go online and enter their basic information, including a driver's license number or state ID. ...
  • United Bank. United Bank has the same requirements as TD. ...
  • Synchrony. ...
  • Chase Bank. ...
  • Axos Bank. ...
  • Ally. ...
  • Wells Fargo.
24 Jan 2022

How long does a closed bank account stay on your record? ›

An account that was in good standing with a history of on-time payments when you closed it will stay on your credit report for up to 10 years. This generally helps your credit score. Accounts with adverse information may stay on your credit report for up to seven years.

What is the easiest bank account to open online? ›

Following is a partial list of banks that can open an account entirely online, with no need for a customer to visit a branch.
  • United Bank*
  • United Community Bank*
  • Vista Bank.
  • Washington Trust Bank.
  • Wells Fargo.
  • West Plains Bank and Trust Company*
  • Wood & Huston Bank*
  • Woodsville Guaranty Savings Bank.

What is a good second chance bank? ›

A few banks and financial companies backed by banks offer second chance checking nationwide: Chime (account name: Spending Account, available online) Green Dot Bank (account name: GoBank, available online and at Walmart stores). LendingClub (account name: Essential Checking, available online).

Does Green Dot use ChexSystems? ›

Green Dot Reloadable Prepaid Debit Card does not use ChexSystems and does not require a credit check. Details of prepaid debit cards include: You will be charged $9.95 per month, unless you loaded $1,000 or more on the card during the previous cycle. There is no minimum deposit.

Does Capital One use Chexsystem? ›

Capital One will no longer use ChexSystems, a computer program that screens customers seeking to open checking or savings accounts, to decide whether consumers pose credit risks, New York Attorney General Eric Schneiderman said in a statement.

What companies use ChexSystems? ›

Common Banks That Use ChexSystems
  • National banks and federal branches of foreign banks. JP Morgan Chase & Co. Bank of America Corp. Citi Group Inc. U.S. Bancorp.
  • Savings associations or federally chartered savings banks.
  • Federal credit unions.
  • State-chartered banks.
  • Federal Reserve System member banks.
18 Jul 2021

What does it mean to be blacklisted by a bank? ›

To be “blacklisted” by ChexSystems effectively means that you have a very poor ChexSystems score. Due to a history of overdrafts, bounced checks, etc., your score is low enough that any bank considering you for a standard checking account will deny you based on your risk profile.

How do debt collectors find bank accounts? ›

A creditor can merely review your past checks or bank drafts to obtain the name of your bank and serve the garnishment order. If a creditor knows where you live, it may also call the banks in your area seeking information about you.

What banks do not use ChexSystems? ›

19 Banks That Don't Use ChexSystems
  • TD Ameritrade. TD Ameritrade doesn't use ChexSystems to screen applicants, although opening an account is subject to a soft credit pull. ...
  • Axiom Bank. ...
  • Woodforest National Bank. ...
  • GTE Financial. ...
  • Southwest Financial Federal Credit Union. ...
  • Green Dot. ...
  • Wells Fargo. ...
  • Capital One.
7 Jun 2022

How do I find out if my name is in ChexSystems? ›

Consumers can request a ChexSystems report over the phone by calling 1-800-428-9623. Callers will then verify personal information through ChexSystem's voice messaging system. Order a ChexSystems report by fax. In addition to phone, standard mail, and online requests, ChexSystems also offers a fax option.

How do you lift a freeze on ChexSystems? ›

Should you wish to temporarily lift or permanently remove your security freeze, you may submit your security freeze lift request via our website or you may submit your request by mail or fax. You may also contact Consumer Relations by telephone at 800.887. 7652.

Does ChexSystems affect my credit score? ›

Another way that banks and credit unions decide to approve a new checking account is by reviewing your banking history through a verification service known as ChexSystems. This verification does not affect your credit score.

Can I open a bank account if I'm in ChexSystems? ›

When you apply to open a checking or savings account, most financial institutions will run your name in the ChexSystems database to see if you have a report. Some financial institutions may deny everyone who has a ChexSystems report, while others may only deny people with certain types of activity.

What's the easiest bank to open an account with? ›

The 8 Easiest Banks To Join
  • Chime. Chime1 is probably the easiest to join. ...
  • TD Bank. To sign up with TD, users can go online and enter their basic information, including a driver's license number or state ID. ...
  • United Bank. United Bank has the same requirements as TD. ...
  • Synchrony. ...
  • Chase Bank. ...
  • Axos Bank. ...
  • Ally. ...
  • Wells Fargo.
24 Jan 2022

Does Green Dot use ChexSystems? ›

Green Dot Reloadable Prepaid Debit Card does not use ChexSystems and does not require a credit check. Details of prepaid debit cards include: You will be charged $9.95 per month, unless you loaded $1,000 or more on the card during the previous cycle. There is no minimum deposit.

What happens when a bank closes your account for suspicious activity? ›

Bank officers can be personally fined or sent to jail if they don't report suspicious activity or stop it when they can. To protect themselves, banks will cut off accounts that could possibly be involved in crime, even if there is no proof. Banks have a lot of leeway to freeze or close accounts on a case-by-case basis.

How long does a closed bank account stay on your record? ›

An account that was in good standing with a history of on-time payments when you closed it will stay on your credit report for up to 10 years. This generally helps your credit score. Accounts with adverse information may stay on your credit report for up to seven years.

Why am I on ChexSystems? ›

ChexSystems is a consumer credit reporting agency that tracks activity related to closed checking, savings, and other deposit accounts at banks and credit unions. If you've ever had issues with a deposit account, such as a bounced or returned check, it's possible that you might have a ChexSystems profile.

Can you open bank account with frozen credit? ›

If you froze your credit reports at all three bureaus, you would need to temporarily remove all of them before opening an account. Another question you should ask is whether your bank uses a soft or hard pull to check your credit. A soft pull won't affect your credit score.

Should I put a freeze on ChexSystems? ›

It's not a great idea to freeze your ChexSystems report if you're considering switching banks; you'll want the new bank to have access to it. But if you have a clean record and you're happy where you are, a freeze offers some protection against identity theft.

Does LexisNexis freeze work? ›

LexisNexis Risk Solutions offers security freezes–and lifts security freezes–free of charge.

What companies use ChexSystems? ›

Common Banks That Use ChexSystems
  • National banks and federal branches of foreign banks. JP Morgan Chase & Co. Bank of America Corp. Citi Group Inc. U.S. Bancorp.
  • Savings associations or federally chartered savings banks.
  • Federal credit unions.
  • State-chartered banks.
  • Federal Reserve System member banks.
18 Jul 2021

Does Capital One use Chexsystem? ›

Capital One will no longer use ChexSystems, a computer program that screens customers seeking to open checking or savings accounts, to decide whether consumers pose credit risks, New York Attorney General Eric Schneiderman said in a statement.

How many banks use ChexSystems? ›

More than 80% of banks and credit unions use consumer reports from agencies such as ChexSystems or Early Warning Services to help them decide whether to approve bank account applicants, according to the National Consumer Law Center.

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