There are many people in America in need of a second chance in their personal life as well as financial status. Americans from all walks of life, from single parents to divorcees, and those who are just recovering from an economic slump are trying to start anew. What is a better way to commemorate your efforts than to set up a new checking account?

The needs of these individuals are no secret to the banks. That is why there are so-called second chance bank accounts that can help these people start over. Second chance checking accounts are bank accounts specifically for customers who have a negative financial history. These customers are listed in ChexSystems, which is a national database of consumer checking history. This list is used by financial institutions for the purpose of monitoring the activities of consumers. Once your name gets listed there, the record will stay for five years. I need not tell you that it is extremely difficult to get off this list once your name is there.

The list in ChexSystems provides poor assessment of the risk involved with granting another chance to a potential customer. One reason for this is that the list contains names of individuals who should not be there at all. Banks use the ChexSystems list in different ways, but usually it is for setting parameters for defaulting customers.

Because the ultimate goal of any banking institution is to improve the quality of life of depositors and the community in general, second chance checking accounts are given to customers who have bad financial records or who have been blacklisted. Second chance checking accounts are perfect for blacklisted individuals who cannot set up accounts in mainstream banks because of derogatory reports. Of course, the second chance checking account is only the start. These customers are expected to return to mainstream banking after they have proven that they can maintain a good record.

These second chance checking accounts have restrictions attached to them, and some activities and transactions are impossible to process. An example of these restrictions is the denial of issuing check books. There are banks that have lax guidelines when a customer wants to open a second chance checking account, taking into consideration the potential financial problems related with checking account management.

Banks have varying requirements for eligibility to open a second chance account. Some banks need a big opening deposit. Other banks are considerate enough to include most of the features of regular checking accounts like online payments, direct deposits and even ATM withdrawals.

If you are over drafted, or you have lost a great deal of cash in the past because of debt, a second chance checking account may be the “fresh start” you are looking for. You can easily rebuild your financial background and do better with your checking account this time around.

As long as there is no fraud recorded under your name, banks can grant these second chance checking accounts, even if your name is on the ChexSystems’ list. Some banks choose from the people on the list during the selection process. If you handle this second chance well, you will soon be able to open a mainstream bank account.

Chexsystems is a reporting agency for over 9,000 banks, which represents over 80% of the banks and credit unions in the United States. Commonly misspelled as Check Systems or Chex Systems, Chexsystems is where banks and credit unions report any problems they have with the way consumer handled their bank account. The banks do this so they have a central facility to share information on any consumers who abuse their checking or savings account privileges. This way the banks can protect each other from repeat offenders in the future.

Some common examples of the type of problem that gets reported to Chexsystems include:

• Account abuse – via debit card
• Overdrafts by multiple checks
• Using fake identification to open an account
• Fraud on the part of the account holder
• Depositing a fraudulent check
• Customers who owe the bank unpaid fees after their account is closed.

One you have been reported to Chexsystems for abusing your checking or savings account, you will find it hard to open an account at any bank that is a member of Chexsystems. This is because any bank that is a member of Chexsystems will run your name through the Chexsystems records to see if you have been reported for abusing your bank account by another bank before they will allow you to open an account with their bank.

So what do you do if you were reported to Chexsystems?

Either find a bank that does not use Chexsystems and therefore will allow you to open an account or go back to the bank that reported you and try to clear up any problems and ask them to have you name removed from Chexsystems’ records.

On this website, we list the banks and credit unions by state that still do not use Chexsystems. Although this list gets smaller and smaller as time passes, there are still banks and credit unions in most states that will let you open an account without clearing you through Chexsystems.

How long does my record stay on Chexsystems?

Unfortunately if you are reported to Chexsystems by a bank for “cause” (which basically means your account was closed because you abused your bank account), the incident will remain on your record for five years. This is a long time to go without opening a bank account.

Is Chexsystems like a credit bureau?

The difference between Chexsystems and a credit bureau is that a typical credit bureau will give your handling of credit a score – commonly known as a FICO score. This score will go up and down with time depending upon how you handle your credit. One bad incident will hurt your score, but it does not prevent you from getting credit.

On the other hand you could handle your bank account perfectly for twenty years and have one bad incident. If this incident is reported to Chexsystems, you will probably not be able to open a new bank account despite your perfect handling of your checking account privileges for many years.

This difference is why many people feel that the Chexsystems reporting practices are unfair to the consumer. But despite this fundamental flaw in reporting, consumers all across the country find that they are helpless when it comes to dealing with Chexsystems.