Have you been denied a checking account? And you don't know the reasons for it. It may be that your name is in the ChexSystems database.
ChexSystems is an association of banks and other financial institutions that share information with each other and have created a database of customers with poor financial skills. Banks lose a lot of money when accounts remain unused or are little used by the customers. There are many people who open accounts with banks but don't make use of it. To prevent such losses, some financial institutions have come together and have created a database of customers who are poor users of checking accounts. At present, most of the banks use ChexSystems to screen customers before opening an account. And, if you have your name in the ChexSystems then you will be unable to open any account with the member organizations. ChexSystems is very much like a credit bureau except for the fact that it doesn't deal in debts but with bank accounts of the individuals. It also doesn't provide any credit score.
Your name can figure in the ChexSystems if:
- Commit unlawful activities using your account.
- Misuse ATM cards, checks, and other services of the account.
- Give incorrect personal details.
- Don’t comply with any of the clauses in your agreement.
One of the criticisms faced by ChexSystems is that a customer doesn't know that his name figures in the ChexSystems until he has been denied opening an account. However, you can request for a copy of your ChexSystems file if you have been ever denied opening a bank account. And, you can also get it corrected if you have been wrongly put in the list.
Under the provisions of Fair Credit Reporting Act (FCRA), reporting agencies like ChexSystems have to fix any of the inaccuracies in the credit report. And, failure to do so can lead to lawsuits and penalty for the agency. So, if you find that your name wrongly figures in the list then don't delay. Get in touch with the officials of ChexSystems and register a formal complaint with it giving your personal details. Keep a copy of the complaint letter for any future reference. You may also need it as legal evidence in case the inaccuracy is not fixed. After a month, get a fresh copy of your ChexSystems report to verify whether the inaccuracy has been fixed.