If you’ve recently been flagged by ChexSystems for a recent banking mistake you made, you might be wondering how to get out of it.
Whether you have bounced a check, withdrew more money than you had available, or have unpaid negative balances, getting a negative listing on your banking report from ChexSystems can be a real headache. Especially if it results in your account being closed or frozen.
Luckily, consumers that have been flagged by ChexSystems have options to get negative listings removed from their report.
How ChexSystems Works
ChexSystems is a consumer reporting agency (CRA) that is used by over 85 percent of banks and credit unions in the U.S. It is the primary service used by financial institutions to screen applicants that are applying for a new checking or savings account.
What Information is Reported to ChexSystems?
The expansive ChexSystems database stores information on almost every checking and savings account holder in the country. Having access to such a vast amount of data gives them a tremendous amount of influence in the banking sector.
Having negative checking account information in the ChexSystems database can result in you being blacklisted, making it difficult for you to be approved for another checking account. This negative information is sorted into two broad categories:
- Account abuse
- Suspected fraud
Account abuse refers to when a bank believes that you have done something that goes against their terms and conditions (e.g. unpaid fees or unpaid overdrafts). Suspected fraud is when the bank believes that you have intentionally committed an act of fraud (e.g. check fraud).
What to Do if You Have Negative Information on Your Report
Thankfully, there are certain actions you can take to get your negative banking information removed from the ChexSystems database. ChexSystems is much like any of the three major credit reporting agencies; you have rights as a consumer to dispute any negative information on your report.
Dispute Negative Listings With ChexSystems in 5 Steps
Just like you would dispute negative or inaccurate listings on your credit report, you can also file a dispute with ChexSystems to ask for further review. Here are the steps to disputing information on your ChexSystems report.
Step 1: Obtain a Copy of Your ChexSystems Report
The first thing you’re going to want to do is to get a copy of your ChexSystems report. Under the Fair Credit Reporting Act (FCRA), you are entitled to a free copy of your ChexSystems report once per year. You can also get a free copy if you were denied a bank account in the past 60 days.
When ordering your free report, we strongly recommend getting your report by mail or fax. If you obtain your free annual report online, ChexSystems can delay their response up to 45 days. Ordering through mail or fax gives ChexSystems only 30 days to respond.
ChexSystems provides a PDF form on their website for you to fill out that allows you to dispute a negative claim on your banking activity report. Print out the PDF form and send it in the mail to expedite the response time.
Step 2: Select What Information You Want to Dispute
When reviewing your ChexSystems report, keep in mind that you want to dispute any inaccurate, unverifiable, or unfair items. So any information that you find on your report that isn’t 100 percent correct can be disputed. That includes:
- Incorrect personal information
- Incorrect account information
- Cases of potential identity theft
When errors are discovered and disputed, ChexSystems is required to update the information within 30 days from the time they receive the dispute. If the information cannot be verified as completely accurate, they must delete it from your report.
Step 3: File a Dispute
There are plenty of free dispute letters out there to fill out and send to ChexSystems to initiate the dispute process. Our sister company, CheckingExpert.com, has sample letters that you can use for free. All you need to do is input your personal information.
It’s also important to note that all dispute letters should be sent via Certified Mail. It’s a bit more costly to send, but it will provide you with a document that will have information on when it was received and who it was received by.
The first letter you send will initiate the dispute process. Much like other consumer reporting agencies like Experian or Equifax, ChexSystems will “investigate” your dispute. Investigate is in quotes because this process usually involves running it through a computer system and spitting out an automated response. Rarely will an actual person review your dispute the first time around.
Make sure to include a copy of your Social Security card and/or driver’s license so that they can easily identify that the letter was sent by you.
Step 4: Wait for a Response and Act Accordingly
If you get a response that the disputed item was verified, you have the right to request the method of verification under the FCRA, Section 611 (a) (6) and (7). You can request verification by sending a second dispute letter. CheckingExpert.com has a solid template that you can go off of.
When requesting this verification, it is not uncommon for ChexSystems to try to stall the process by telling you that “the source has verified the information to be accurate and complete. As a result, it will remain on file at ChexSystems.” While this is a typical response, you should not let it intimidate you. You need to stay persistent and continue to send your dispute letters.
ChexSystems will need to provide the method of verification within 15 days of your request. Getting this level of verification is usually difficult for ChexSystems because they don’t speak to anyone to obtain the proper verification.
At this point in the process, it’s important to remember that disputing negative information can take time. Keep a file handy with a record of your correspondence and when you sent it.
Step 5: If Necessary, Send Additional Dispute Letters
Depending on the outcome of your hard work so far, you may have to send additional dispute letters. These letters will continue to put pressure on ChexSystems and demonstrate to them that you are not backing down.
If the information that you dispute has grounds for removal or a lack of total correctness, your information will be deleted from your ChexSystems file. If the information is found to be correct and accurate, the information will stay on your ChexSystems report for 5 years.
What to Review on Your ChexSystems Report
Any type of financial report will seem confusing if you’ve never seen it before. This is also the case with ChexSystems reports at first glance. However, if you break it down, you will find that it is not as confusing as it first appears.
The report is organized and gives you a detailed breakdown of the items it accounts for. Here is an overview of what you can expect to see on ChexSystems reports:
1. Personal Information
The first thing you will see on your report is your personal information. This will include your name, current address, and date of birth.
2. Security Freeze Record
Those who have contacted ChexSystems in the past, asking them to stop providing access to your report to banks, credit unions, and retailers, have requested a security freeze. This information will show up in your report.
It’s not recommended to request a security freeze while you’re going through ChexSystems’ dispute process. If you haven’t requested a security freeze, then you shouldn’t expect to see it on your report.
3. Consumer Reported Identity Theft Security Alert
Anyone who has reported an identity theft incident in the past will be able to see it in their ChexSystems report. Those who haven’t reported identity theft should not see it in their report.
4. Reported Information
This section is extremely important and should be reviewed carefully. Any information that appears in this section should be understood and analyzed. Once reviewed, you will need to know which incident is false and then proceed to dispute it.
This section will outline the various financial institutions that have reported you and have closed your checking or savings account. It should also state the reason for the closure and any amount that is owed at the time of the closure.
5. Inquiries Viewed by Others
Banks that have viewed your ChexSystems report will appear in this section of the report.
6. Check Cashing Inquiries
If you write out a check at Walmart or any other major retailer, they will run your checking account information through a company called Certegy Check Services. These inquiries will remain in this section for two years.
7. Inquiries Viewed by You
This section will outline all the transactions that you might have initiated. This can lead to you not recognizing the source of the transaction. However, these inquiries are only viewable by you and are not included in reports to other financial institutions.
The number of inquiries in this section doesn’t negatively impact your consumer report. These inquiries will remain in your file for up to one year.
8. Retail Information
This section is another important one to review when going over your ChexSystems report. This is especially true if you have any negative events listed in your report. It can refer to returned checks reported by retailers to Certegy Check Services.
With that in mind, any consumer who has bounced a check at a major retailer like Target or Home Depot, that consumer can expect information like this to show up in their report for up to four years.
9. History of Checks Ordered
Believe it or not, ChexSystems tracks how many checks you have ordered over the years. With that said, we recommend ordering checks from companies that will not share your personal information with ChexSystems.
10. Social Security Number Validation
This section includes your Social Security number information. ChexSystems knows the year and dates your social security number was issued. While this might seem a little invasive, it is the reality of just how much data ChexSystems has on the majority of consumers.
11. Notices
You should pay very close attention to this section because this is where ChexSystems details your right to dispute the information on your report. It also outlines that they are required to respond within 30 days or 21 days for residents of Maine.
Dos and Don’ts of Disputing Your ChexSystems Report
Disputing a negative listing on your ChexSystems report will require a certain level of patience and organization. By knowing how their system operates, you will be better equipped to successfully get an item removed from your report.
Here are some of the dos and don’ts when it comes to filing a dispute with ChexSystems.
Do make sure you are familiar with your ChexSystems report.
These reports are usually several pages long and can seem confusing at first glance. Don’t start the dispute process until you feel confident that you have a complete understanding of your report.
Do understand that this process could take as little as 30 days and as long as 6 months.
It is important to know that this process can take a long time. You should probably plan for it to last for closer to 6 months rather than 30 days.
Do always include a copy of your Social Security card and/or driver’s license with each dispute.
Providing identity verification is important and will be required by ChexSystems during the dispute process.
Do include your Social Security number and date of birth in each letter.
When you include all the required data in your dispute, it shows ChexSystems that they’re dealing with an informed consumer.
Do include your ChexSystems consumer ID number in each letter.
This can be found on your initial ChexSystems report.
Do send every dispute letter via USPS Certified Mail.
This one is important! Sending your dispute letters via Certified Mail will let ChexSystems know that you have your eye on the calendar and that they must respond within the required timeline.
You can go into most post offices and send a letter via Certified Mail. Be aware that there will be extra fees involved with this type of postage. When your letter arrives, an employee working at ChexSystems is required to sign saying they have received the letter. You will get this signature back with the date received.
Don’t ever file a dispute online.
Sending a dispute online gives ChexSystems more time to fight the dispute. If you send the dispute by mail, ChexSystems will need to respond with the required 30 days after receiving the report.
Don’t dispute more than three items with each letter.
Disputing more than three items can result in ChexSystems further stalling the process, saying that they received a suspicious request regarding your report. They know exactly what is going on and are simply trying to delay the process.
Don’t dispute directly with the bank or credit union unless you know the data they have sent to ChexSystems is incorrect.
Keep in mind that your dispute process is focused on the fact that ChexSystems is unable to provide original documentation.
What to Do if Your Dispute Is Unsuccessful
Sometimes, ChexSystems investigations do not resolve disputes, even after you applied pressure and sent several dispute letters. With that being said, you still have a few options.
File a Lawsuit in Small Claims Court
Filing a small claims lawsuit for every violation of the FCRA is likely to result in your favor. A lawsuit would require ChexSystems to pay an attorney to litigate and award you for FCRA violations (each valued at $1,000).
However, ChexSystems probably won’t want to do so. Instead, they will try to settle your case outside of court and remove the record against you.
Wait for the Negative Information to Expire
As previously mentioned, most negative items will stay on your ChexSystems report for 5 years. If your dispute is unsuccessful, it may be worthwhile to let the information expire.
Luckily, there are alternative options to banking out there that can provide you with excellent checking and savings account options.
Final Thoughts
Having negative information on your ChexSystems report can be devastating. Not only can a bank freeze or close your account, but because ChexSystems works with the large majority of financial institutions, you might have a difficult time opening up a new checking account elsewhere.
Fortunately, you have rights that can help you dispute information and restore your banking opportunities. If you stay persistent, organized, and patient, there’s a good chance that you will be able to get out of ChexSystems.
