Checking accounts are extremely valuable to individuals living in the USA. If they don’t have one, they miss out on the most convenient way to pay for utility bills. They will also find it difficult to receive payment from employers. While everyone can open a savings account, not everyone has the ability to open checking accounts. There’s a certain blacklist somewhere that determines the individuals who are banned from opening checking accounts in certain banks for five years.
I’m talking about the institution called ChexSystems. This is not a banking institution but a network of banking institutions that help each other avoid opening their doors to people or businesses with bad banking history.
ChexSystems is a service run by the same group that handles US citizens’ FICO credit scores. If you should get listed on ChexSystems, that’s a notation that can haunt you and your financial abilities for five full years!
Banks and financial institutions pool information on accounts that get closed for cause. This means anyone can get listed on Chexsystems if he commits some of the activities that are considered fraudulent, like fraud, debit card abuse and ATM abuse. If you have insufficient funds the bank honoured, you will be given time to pay the amount you owe. If you fail to do this during that period, you will automatically get reported to Chexsystems.
If you authorize automatic payments but your account does not contain sufficient funds to cover the payment, you might be at risk of getting listed on Chexsystems. Simple errors in your application may also land you in the black list.
Finding out that you’re banned from opening a checking account can be extremely depressing for people who may already have financial troubles. Not having a checking account severely debilitates your spending and your business transactions. Can you imagine all the heartaches this could bring you just because of an overdraft?
Some banking institutions are more lenient when it comes to overdrafts, but some banking institutions are not as lenient. If your bank does not give you ample time to pay, and you get reported to Chexsystems immediately, there are things you can do to solve your financial worries (at least, for a while).
Find banks that will allow checking account applications from people who are listed on Chexsystems. Some banks are not under the Chexsystems network, and thus, they don’t know about the blacklisting of your account. They also don’t know about your credit records. If your application gets approved, make sure you behave yourself. Remember, there are very few banks that are not under the Chexsystems umbrella so if you mess up this chance to keep a checking account, you may not get another one.
Look for banks that offer second chance checking accounts. There are requirements for opening a second chance checking account, including agreeing to more stringent terms and conditions. You may also be required to pay off your debt before you can open an account.
If all else fails, you can always try getting your ChexSystems report removed from the system. Order your consumer report to find out if there are erroneous statements in it. If you find one, you can ask Chexsystems to verify the information. They are compelled by law to remove the information in the instance that they are unable to verify it. Contact ChexSystems using this address: Chex Systems, Inc.
7805 Hudson Road, Suite 100, Woodbury, MN 55125, Fax: (602) 659-2197. Instructions can be heard by calling: (800) 428-9623.