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ChexSystems - What is it all about and how does it work?

Chexsystems is primarily a deposit account verification service and a consumer credit reporting agency just like TransUnion, Equifax, and Experian. Chexsystems maintains data about consumers who have mishandled deposit accounts. They provide this information to various financial institutions such as banks and credit unions to help them identify applicants mismanaging their accounts.

Chexsystems - How does it work?

Nearly all major banks and credit unions use Chexsystems during the deposit account application process. Chexsystems provides information to banking institutions about how the consumer has managed their deposit account in the past 5 years. This helps the banking institutions avoid risky customers and protect themselves against future losses. For example, if your bank has closed your account because it was overdrawn, then it will be shown on your consumer credit report. Banking institutions and credit unions will regard you as a risky customer and are less likely to open a new deposit account for you.
However, it is necessary to keep in mind that ChexSystems does not approve or reject accounts for banking institutions. They simply give information to the inquiring banks about the consumers' handling of their accounts. The decision to create new accounts for consumers lies entirely with the banks.
Generally, a consumer's ChexSystems report comprises banking irregularities like unsatisfied balances, multiple overdrafts, fraud, savings account abuse, etc. Each and every negative report remains on their file for 5 years. Once, the 5 year time period is over, ChexSystems usually removes the negative report.
A reporting bank or credit union can request that ChexSystems delete the negative report. However, it is essential to keep in mind that a reporting bank is not compelled to delete a correct report of account mismanagement due to non-repayment of bills to the bank. However, once the bills are cleared, the reporting bank has to mark the account as "Paid".

Can you obtain a copy of your report?

You can obtain a copy of your consumer credit report from ChexSystems annually.

Chexsystems - Is it a credit bureau?

ChexSystems is not a credit bureau. It is a consumer credit reporting agency. However, ChexSystems is constrained by the Fair Credit Reporting Act (FCRA) and other laws just like the credit reporting agencies. It is also certified to function as ChexSystems Collection Agency and offer debt collection services to its members. ChexSystems Collection Agency is governed by the Fair Debt Collection Practices Act (FDCPA).

How can you dispute information in ChexSystems?

If consumers feel that their file contains wrong or incorrect information, then they have the legal right to dispute the information. They should contact Chexsystems Consumer Relations Department as soon as possible. This department helps consumers to dispute incorrect information.
If you find outdated or wrong information in your ChexSystems file, send a dispute letter to ChexSystems. When disputing information, it is advisable to send the letter via certified mail or fax so you'll have a proof that ChexSystems has received the letter.

Under the Fair Credit Reporting Act (FCRA), the ChexSystems has to investigate a disputed item within 30 business days of receiving the letter. If the reporting bank or credit union can't verify the disputed item within 30 business days of receiving it, then the item has to be removed from your credit report. Under FCRA rules, ChexSystems should inform you how they verified your disputed item. If the ChexSystems fails to inform you how the item was verified, they should remove the item.

How can you contact ChexSystems?

If you want to communicate with ChexSystems, you can contact them at the following address:

ChexSystems , Attn: Consumer Relations , 7805 Hudson Road, Suite 100., Woodbury, MN 55125
Fax : 602- 659-2197 | Phone Number : 800-428-9623