The Dollar Stretcher by Gary ForemanDear Dollar Stretcher, Would you please check out ChexSystems? I’d like to know if anyone else has had an experience with them and what they have done about it. JS JS doesn’t say it, but he’s probably had trouble trying to open a checking or savings account. And more and more people are running into the same problem. So let’s take some time to learn about ChexSystems and the screening that banks do before they agree to open an account for you. First, some background on ChexSystems. It’s owned by Deluxe Corp. the world’s largest check printer. They keep track of bounced checks, ATM overdrafts, ‘closed for cause’ accounts and the number of times that banks ask about your financial history. According to ChexSystems, banks lose $15 billion a year to check fraud and abuse. Banks use the service in an attempt to avoid problem customers. Deluxe claims that over 80% of all banks use ChexSystems. Although they’re the largest, ChexSystems isn’t the only agency offering this type of service. Telecheck is also in the same business. It’s important to note that ChexSystems does not approve or deny your application for a new account. All they do is provide information to the bank. The bank makes the final decision. Next let’s take a look at the files. Your file will include your name, address and social security number. It will list factual information that the banks can use to screen prospective customers. One such record is that another bank has closed your account ‘for cause’. That means that you wrote too many bad checks or had too many overdrafts. If ChexSystems shows that a prior account was ‘closed for cause’ then it’s highly unlikely that a new bank will open an account for you. Currently over 19 million accounts are listed as ‘closed for cause’. If you owe the bank money when your account is closed that will show in your report. Paying the bank the monies owed will not remove you from ChexSystems’ list. They are only obligated to include a note in your file that you repaid the debt. The file will also show any non-sufficient funds (NSF) funds checks. They’ll note whether you’ve made the check good or not. Some prospective banks will overlook one or two NSF checks. Others will not. ChexSystems also lists how many times you’ve tried to open a new account. If you’ve tried repeatedly (and unsuccessfully) that will be listed. The more times you try the harder it will get. The files are governed by the Fair Credit Reporting Act. But that provides limited help for frustrated consumers. Accurate negative information will legally be kept on file for five years. What should you do if you’re already on file? First, don’t close any open accounts. It may be hard to replace them. You might not like your bank’s charges, but don’t close your current account until you’ve opened a new one. Find out what is actually in your report. You can order one from ChexSystems. ChexSystems is obligated to remove inaccurate information. So if the report contains errors, you can have them corrected. But you have no right to have accurate information removed. You can contact ChexSystems here. Pay any NSF checks and outstanding fees that are listed on the report. Even if you’ve already closed the account and don’t deal with that bank any more. After payment has been made, send a written request to the bank asking that they send a note for your file detailing the payment. Look for entries that aren’t accurate. You can have a statement explaining your side of any disputes entered into your file. It’s almost impossible to have factually accurate information deleted until the five years have passed. And filing for bankruptcy will not erase your ChexSystems file. If you need to open a new account, tell the prospective bank that you have some problems in your ChexSystems file. Show them your report. If they’re going to turn you down it’s better if they do it before accessing the file themselves and adding another entry that shows you’ve been refused. It’s also possible that you can find a bank that doesn’t use ChexSystems. Currently some internet banks are more forgiving than their traditional brethren. Suppose you don’t have problems now and want to avoid them. Generally three things cause negative entries in your file. The first is obvious. Don’t write checks until you’re sure that the money to pay them has cleared your account. Just because you deposited a check yesterday doesn’t mean that money is available for use today. Find out how long it will be before you can count on that money to pay the checks you write. Second, keep track of your account balance and reconcile your bank statement as soon as you get it. Even with a calculator it’s easy to make mistakes in your checkbook. It’s important to know how much you have in the account at all times. Finally, make sure that all checks have cleared and all fees are paid before you close an account. One possible source of potential problems are automatic withdrawals. You must stop all automatic withdrawals before you close an account. Otherwise they’ll create a ‘bounced check’ when they try to access your closed account. Recently there has been more public awareness of ChexSystems and the bank approval process. The NAACP has complained that the poor are hardest hit. Banks have met with government representatives and will consider using a more flexible system to evaluate potential customers. Additional legislation is possible, but it’s hard to tell banks that they must do business with people who could prove unprofitable. We hope that JS isn’t currently having a problem with ChexSystems and enjoys the benefits of a clean file.