Q: What is ChexSystems?
A: Ever heard of ChexSystems? You know about credit bureaus, right? You may also know about their credit score that measures whether you are credit worthy and a good or poor risk for a loan. Few, however, have ever heard about ChexSystems, a private sector database maintained by the Deluxe Corporation that 80 percent of U.S. banks use when deciding to offer checking accounts.

ChexSystems currently keeps the records of over seven million customers that have either bounced checks or committed fraud in the last five years. Banks contract with the Deluxe Corporation to send records of their customers with closed accounts to ChexSystems, just as credit card companies coexist with the major credit bureaus. In return, banks have access to ChexSystems when reviewing an application of a new customer for a checking account.

Q: My checking account was recently closed due to "cause." What is "for cause?"
A: Banks differ greatly between them as to what valid reasons are for closing an account. Here are some examples: * The bank was unable to collect for an overdraft, ATM transaction, or automatic payment which they honored on insufficient funds.(Regardless of amount, and often without waiting more than a few days!) * Multiple overdrafts. * Savings account, debit card or ATM abuse. * Fraud. * Providing false information in opening account. Each incident stays on your record with Chex Systems for FIVE full years from the date the incident was reported. Getting an incident reported to Chex Systems is the Kiss Of Death for your financial future. Most banks now say: "Our bank policy is that we will not open a checking account for you if you have one or more incidents reported to ChexSystems."

Q: How long does the report stay on file? How do I get it deleted??
A: Each report submitted to Chex Systems remains on our files for five years, unless the bank or credit union that filed the report requests its removal or ChexSystems becomes obligated to remove it under applicable law. The decision to delete a report is entirely up to each bank or credit union and its individual policies.

Q: I paid the bank. Why wasn't the report removed?
A: A reporting member (ChexSystems bank) is under no obligation to remove an accurate report of account mishandling due to payment of monies owed. However, if a collection amount is reported, the member is obligated to mark the account as paid.

Q: How can I see what is in my ChexSystems file?
A: You can order a copy of your report from ChexSystems.

Q: How do I dispute my Chex Systems information?
A: ChexSystems Consumer Relations Department helps people who believe their file contains misinformation. Visit disputes for more information.

Q: Why do I have to give chexSystems personal information, like my social security number and drivers license number?
A: ChexSystems ask for this information to ensure that they make a complete and accurate search and are able to identify all information that may pertain to you.

Q: Why does ChexSystems tell the bank not to open an account?
A: This is directly from the ChexSystmes website: "ChexSystems neither approves nor declines accounts for banks and credit unions. The decision is entirely up to them.. "

Q: Why wasn't my ChexSystems report removed when I filed bankruptcy?
A: A bankruptcy filing only affects the collection of outstanding debts. It does not require the removal of accurate factual information concerning your account, or so ChexSystems states. Be prepared to dispute anything that they state as "accurate factual information."

Q: How did I end up on ChexSystems List?
A: Sometimes it doesn't take much to land on ChexSystems' list of banned account-holders. A vocal critic of the agency says his former bank reported him to ChexSystems after an insurance company automatically debited $60 from a closed account. On the other end of the spectrum, ChexSystems alerts a bank when an account applicant furnishes a phony Social Security number or when the applicant has a history of fraudulent check-kiting schemes.

Critics complain that financial institutions use ChexSystems indiscriminately, weeding out not only checking-account applicants who intend to commit fraud, but also law-abiding people who wrote a bad check or two by mistake, or who were irresponsible with their checking accounts but have since learned their lesson. They want Congress to specify which offenses merit reporting to the agency.

A negative ChexSystems report stays in the database for five years and can doom your chances of getting a checking account for that period. ChexSystems has records of 19 million accounts closed for cause. That's one record of a closed account for every 14 U.S. residents.

Sometimes it doesn't take much to land on ChexSystems' list of naughty account-holders. A vocal critic of the agency says his former bank reported him to ChexSystems after an insurance company automatically debited $60 from a closed account.

On the other end of the spectrum, ChexSystems alerts a bank when an account applicant furnishes a phony Social Security number or when the applicant has a history of fraudulent check-kiting schemes. Eighty percent of U.S. banks and credit unions belong to the ChexSystems network, which testifies to the agency's importance in preventing fraud and losses to hot-check writers. Financial institutions lose $15 billion a year because of check fraud and abuse, according to ChexSystems. The agency estimates that every dollar spent on fraud protection saves $6 in administrative costs, a savings of hundreds of millions of dollars a year..

Q: What do I do if I'm reported to ChexSystems?
A:
* Don't close any savings accounts or other checking accounts, and keep the balances in the black.
* Pay all overdraft fees as soon as you can.
Make good on the checks Once you have paid the overdraft fees and you have satisfied everyone who received a bounced check, get a short explanation inserted into your Chex Systems file. Thomas Bledsoe, questions the fairness of the file hanging around for five years like a stale but juicy rumor. "My life has been a living hell because of ChexSystems," he says, although he acknowledges that he shares the blame: "The reason I am in ChexSystems is best summed up by irresponsibility of youth," he admits.

Bledsoe wrote a host of bad checks when he was 19. He says he paid his overdraft fees immediately and paid the recipients of the bounced checks. His mother persuaded him to close the account so he wouldn't wreck her financial future. Three years later, Thomas tried to open a checking account. Banks rejected him based on his record of bad checks on file with Chex Systems. Thomas believes that ChexSystems performs a valuable function by protecting banks from the unscrupulous, but he is angry at the agency for keeping files on people for half a decade after making honest mistakes.

"I do think that five years is a little harsh and maybe they should shorten it to one or two years," he says. Only by making repeated calls did he persuade the bank to report to ChexSystems that he had repaid the $60 and overdraft penalties. "I had gray hair and no fingernails after a week of this," he says. Thomas criticize ChexSystems for what he says is a lack of accountability to consumers, although they have no kind words for their banks, either.

Try, try again

Theoretically, at least, bank and credit union managers have the option of letting customers open accounts even if they are listed in the ChexSystems database. You can always try to convince the new-accounts manager that your business is worth the risk. Keep in mind, though, that one of the products that Chex Systems offers is Audit Check, which tracks cases in which managers overrode a negative report from ChexSystems and let a customer open an account anyway. With upper management peering over the new-account manager's shoulder, you might not be worth the potential hassle. Finally, you can try to find a bank or credit union that doesn't use Chex Systems through our service. Studies show 80 percent of financial institutions use ChexSystems; so ferreting out an institution that doesn't use ChexSystems can be a challenge.