If you have never had a banking problem that resulted in your bank closing your accounts (for whatever reason) then you probably don’t know who or what ChexSystems is. On the other hand, if you have had banking problems and had accounts forcibly closed, you probably found out who ChexSystems is when you went to get a new bank account and were turned away.
That’s because ChexSystems is a credit reporting agency that works with nearly 80% of all the banks in the United States and, when you have a problem with a bank that uses ChexSystems services, you will be reported to ChexSystems when they close your account(s). If this happens the next time that you try to open a bank account the new bank will check you (and ALL your banking history) through ChexSystems, see that another bank has closed your account forcibly and they will refuse to give you a new account because you’re a ‘credit risk’.
ChexSystems was the brainchild of a grocery store owner back in the late 1970’s. He was getting fed up with customers bouncing checks and his response was to set up a system whereby other store owners could ‘check a customer out’ before accepting their check(s). The ideas was a hit and morphed into the entity that it is today, the biggest credit reporting agency in the US that, ironically, doesn’t report your credit. Indeed you could have a perfect credit score but if you’re on ChexSystems you’ll still have a hard time opening a new checking or even savings account.
ChexSystems has been working for the banks for over 30 years now and is extremely powerful. They report banking fraud and abuse to nearly 80% of the banks in the US and vice-versa. An interesting point is that, at ChexSystems, they don’t report anything positive or neutral, just negative. It’s also very difficult to get off of their database once you’re on, something that has caused many a person substantial amounts of stress.
Even worse is that, once you’re on ChexSystems you’ll be there for at least 5 years unless you can convince them to remove the negative report(s) about your banking history. And, as we stated above, that can be a very difficult task in many cases.
The best thing to do is make sure that you always handle your finances correctly, take care of small problems or mistakes while they’re still small, work very hard with your bank if you’re having financial problems (hey, they’re humans too), and make every effort you can to stay off of ChexSystems radar.
Because frankly, not being able to have a bank account and more importantly a checking account can be a very serious hassle and once you’re on ChexSystems getting one is going to be very difficult.