Why Am I Being Declined When I try To Open a Checking Account?

The story may go something like this:

You try to open a checking account at a local bank because your former bank closed your account for bouncing too many checks. You sit down with a customer service representative and everyone is all smiles. You wait while the customer service representative enters some data into the computer. Then suddenly she turns to you and says “Sorry, you application for a checking account has been declined”.

So you get up and leave not knowing what hit you. Then you decide to try another local bank where you know a teller, but the result is the same. The struggle to open a new checking account continues until you have no where to turn.

So how do all these banks know about your one-time banking problem that got your account closed? The answer lies with a service called ChexSystems. ChexSystems is a popular service (popular with banks – not with customers!) used by most banks and credit unions in the US.  This service, owned by EFunds Inc, is used by nearly 90% of the banks in the country to provide them with information on customers who have mishandled bank accounts or have had banking problems in the past.

If you have had a banking problem in the last five years, you are most likely in the ChexSystems database and your information will be provided to any member bank or credit union that requests it.

One important thing to remember is that it is not ChexSystems that declines you request for a checking account, it is the bank you are applying to. So be polite if you are declined and you may be able to work with the bank to get a new checking account. The decision is entirely the banks.
So How Did I Get Added to ChexSystems?

Whenever a bank closes your checking account for any reason other than voluntarily, your name and banking history will be added to ChexSystems. Typical reasons that a checking account is involuntarily closed are:

·    You have committed bank fraud, such as check kiting or some other check cashing scheme.
·    You had an outstanding balance with the bank and are not making payments
·    You had a negative balance in your checking for an extended period of time

Also you could be added to ChexSystems if you report that your checks were lost or stolen. Now while this could be truthful, the information is sent to ChexSystems to help prevent people from taking advantage of the banking system by repeatedly claiming checks were stolen and used by someone else.