Alternatives To Chexsystems Reports
Consumers with negative ChexSystems reports do have a few alternatives at their disposal.
If youre having trouble opening a checking account, here are two of the easiest workarounds:
- Second Chance Bank Accounts
- These accounts offer you the chance to open a bank account despite having an imperfect financial record
- There are plenty of great options available, many of which also offer you a road to a standard, fully equipped account
- Has limitations and some fees
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Other Alternatives To Banking Without Chexsystems
If you still cant qualify for one of these accounts or prefer to explore other options, you do have some choices. Here are the top alternatives to banking without ChexSystems, along with the pros and cons of each choice.
Second Chance Checking As we mentioned above, sometimes a bank or credit union will offer second chance checking accounts to consumers who have a bad banking history. These accounts are sometimes called fresh start checking or opportunity checking. There are even some big banks like Wells Fargo and Bank of America that offer second chance banking.
Prepaid Debit Cards A prepaid debit card acts very similarly to a regular debit card. The difference is you usually do have to pay a monthly fee of a few dollars. Each prepaid debit card has different ways to upload money, but usually, you can do it at a major retail store like Walmart or online. However, there may be additional fees when you load money.
Secured Credit Cards A secured credit card can help you get a card to make purchases online and in-store, but it does come with some major drawbacks. You need to use your own cash as collateral against the account, plus youll still pay interest on any credit card balances you dont pay in full. These cards are generally used to improve your credit score.
Does Citizens Bank Of West Virginia Use Chexsystems Is It Good For Bad Credit
Considering Citizens Bank of West Virginia or already applying for its account? Find out whether Citizens Bank of West Virginia uses ChexSystems and offers a second chance checking or savings account.
You walk into your local bank branch and sit down with your bank representative to talk about opening a checking account. Maybe youâve been through some financial difficulties in the past, but you are ready to get back on track. But maybe not. You may think your financials are in good shape.
You wait with bated breath through the application process, only to let it out in a sigh of disappointment.
The banking representative turns to you and says, âIâm sorry, but we canât open an account for you right now. You were rejected by ChexSystems.â
At that point, the banker probably explained ChexSystems to you in detail. If you haven’t already, you can read our in-depth guide to ChexSystems and ChexSystems removal, and why it may be having a negative impact on your financial life.
Denials like these are surprisingly common. In fact, CNN has reported that approximately 15% of bank applicants are denied regular bank accounts.
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Common Mistakes That Damage Your Chexsystems Report
When banks see problems on a ChexSystems report, they may refuse to open a checking or savings account for that individual.
Since flagged accounts stay on the report for five years, the best way to prevent problems when opening another bank account is to avoid getting a ChexSystems record to begin with.
ChexSystems has published a list of some common mistakes to avoid, including:
- Bouncing checks
- Co-signing on an account that another person uses for fraudulent or suspicious activity
- Depleting the funds in a checking account to $0 rather than closing the account
- Failing to report lost or stolen checks
- Forgetting to discontinue any automatic payments before closing a checking account
Payment Order Of Items
The payments you authorize against your account may not be presented to us in the order in which you authorized them. The order in which items are presented may affect the amount of overdraft fees you incur. Generally, items in which the bank is directly liable are paid first. We then pay any items that were submitted electronically, such as ACH items, preauthorized automatic transfers, telephone-initiated transfers and any other electronic transfers. Finally, we pay the remaining items based on lowest dollar amount to highest dollar amount. We reserve the right to change the order of payment without notice to you if we suspect fraud or possible illegal activity affecting your account.
NOTE: Please be aware that holds placed on your account for pending electronic transactions, such as hotel or rental car deposits and authorized point-of-sale debit card transactions , reduce your available balance and may cause your account to become overdrawn.
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What Is The Impact Of A Negative Banking Report
Consumers that create financial risk for the bank are blacklisted by ChexSystems and cannot open new accounts.
The most significant impact of having a negative report is that banks may deny your application to open a checking account. This, however, does not mean that you have to be unbanked and dismissed from the banking system.
Some banks offer second chance checking accounts for people who have messy bank histories. This unique account works like a traditional checking account.
It can be more restrictive with fewer features and low limits. It provides you with the opportunity to rebuild your financial standing.
Additionally, they provide an excellent way to maintain responsible banking behavior and help you get back into the financial system.
Approach your report and file proactively and file a dispute if you find any inaccurate information. Also, consider a second chance checking account to rebuild positive banking history.
How Long Does It Take To Get Out Of Chexsystems
The information stays on file for five years from the date the account was closed. This may seem similar to a credit score, but ChexSystems is an entirely different scoring process.
ChexSystems scoring ranges between 100 and 899. The higher the score, the better. Interestingly, you can have a poor ChexSystems rating while having an excellent credit score, and vice versa.
Theyre completely different measures of your financial history, with the information being used in very different situations.
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How Long Do You Stay On Chexsystems
Usually five years. Although federal regulations allow ChexSystems to keep records for up to seven years, the agency keeps them for five.
If you review your report and see any incorrect or out-of-date information, you can also submit a dispute on ChexSystems’ website and with your financial institution.
Keeping Your Account Safe From Chexsystems Report
Once you have opened your bank account, you will want to make sure that you dont end up with any negative remarks on your ChexSystems report. One of the best ways to keep your checking and savings account in good standing is to always make sure that both accounts are well funded. Also, be aware of any recurring charges that may debit money from your checking account. Finally, make sure that you check the balance of your savings and checking account often.
*IMPORTANT* Some banks will allow you to have a backup payment system for your checking account. This will help you reduce your chances of bouncing a check and getting hit with returned check fees. You can use a credit card as a backup for your checking account. Just be sure that your credit card has a high enough limit to handle any possible overdrafts from your checking account.
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Ask The Bank To Reconsider
Before moving forward, it’s worth asking the bank to reconsider their denial of your application, especially if you are an existing customer. Though they use information from reporting agencies, it’s ultimately up to the bank to decide whether or not a customer gets approved for a new application.
Keep in mind that federal law requires banks or credit unions to tell you why you were denied for a bank account, so make sure you get that information.
How To Dispute Chexsystems
If you do want to initiate the process to try to get removed from ChexSystems, we have detailed instructions for disputing ChexSystems.
Either way, we recommend in the meantime that you apply for a non-ChexSystems checking account.
Even a successful dispute can be a lengthy and involved process. You might find that you are weeks or even months away from getting your record cleared.
Opening an account through one of our recommended providers above means you can enjoy all the benefits of a bank account right away.
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The Downside Of Banks That Dont Use Chexsystems
The downside of looking for a Non-ChexSystems bank is that there just are not that many of them around only 20% of banks do not use Chex. In our list of 25 Banks That Dont Use ChexSystems, there are six online banks, zero national banks, zero regional banks, and four Local banks. While this is in no way an exhaustive list, especially the local bank section, we can get a sense that to find a Non-ChexSystems you will need to go online or look local.
Online banks offer customer-friendly terms and a nice web/mobile app on the latest technology. However, you will never be able to walk into a local branch to deposit cash, and it can be difficult to order a special product like a secure/cashier check. In general, reaching a human on the phone can be a frustrating endeavor.
Local banks provide the warm customer service that online banks cannot. If there is ever a problem, you have someplace to walk into to discuss. Unfortunately, local banks seldom have the deep pockets of a rich mega-bank and may be lagging in their technology offerings, with clunky websites and apps, frequent downtime, and a lack of integrated services like Billpay and Zelle.
At the end of the day, choosing a bank comes down to personal preferences. Do some research, read some reviews, and decide what type of bank is right for you. Folks with bad Chex history will simply have fewer options to choose from and may have to sacrifice some preferences in order to obtain a new checking account.
Benefits Of Banks That Dont Use Chexsystems
Here are the pros/benefits of banks that dont use ChexSystems:
- Save on check-cashing fees: Itsaves your money by not using check-cashing services.
- Avoid prepaid debit card fees: You canavoid the myriad of fees that often come with prepaid debit cards. For example, Netspends monthly fee is $9.95, and the reload fee is up to $3.95, and the ATM withdrawal fee is around $2.50.
- Keep your money safe and secure: It offers a secure and convenient place to stash your cash.
- Built-in fraud protection: ItProvides built-in fraud detection means purchases made with bank debit cards offer zero liability for fraud that helps you secure non-Chexsystems business transactions.
- Become BFFs with your Bank: Establish a relationship with your banker that helps you to engage in relationship banking. Your bank can approach you with better offerings on loan rates, insurance, and certificates of deposit for secure transactions.
- Get a mortgage loan: Mortgage lenders need you to provide recent bank statements while applying for a mortgage loan without a credit check. Prepaid debit cards are not the same as having traditional bank statements.
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The Best Second Chance Banks By State
Most major banks dont offer non-ChexSystems or second chance checking, but many community banks and credit unions have them under various names, such as Opportunity Checking and Fresh Start Checking.
Our editorial staff regularly updates the list of banks offering no ChexSystems second chance checking in every state. Heres an overview of these accounts and where you can find them at branches in your area.
|STATE BY STATE|
Bank Account Options When Youre Listed In Chexsystems
If you have a ChexSystems record, its possible that you may be denied for a traditional checking or savings account. In that scenario, there are two alternatives that you can explore for managing your money.
The first is a second chance bank account. Second chance accounts, also known as lower risk accounts, are designed for people who have had trouble with banking in the past. These accounts typically differ from regular bank accounts in things such as:
- Minimum deposit requirements
- Debit card access
- Check-writing access
Second chance accounts can be found at traditional banks and credit unions, and you may also find them online. These accounts can help you reestablish a positive banking history, and, depending on the bank, you may be able to convert to a regular bank account after a set time period.
Another possibility for managing your money when youve been denied a banking account because of your ChexSystems history is using a prepaid debit card instead. These cards allow you to load money and then withdraw cash or make purchases the way that you would with any other debit card. The difference is that they arent attached to a bank account.
When comparing prepaid debit card options, look for ones that offer the best combination of low fees and added benefits, such as the option to enroll in direct deposit or earn cash back on purchases.
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What You Need To Know Before Opening A Bank Account
If youve had a checking account closed due to non-sufficient funds , excessive overdrafts , suspected fraud, or other issues, you may have problems opening another checking or savings account at a later time.
In particular, problems arise when your account is closed, and you still owe the bank fees either for overdraft or other services. Most will refuse to establish an account for individuals who have had these types of problems in the past. This is true even if you currently have funds available to open an account.
Banks rely on ChexSystems to provide information about individuals who have had problems with insufficient funds in the past.
It works much like being denied a credit card due to past credit history. Even if your current situation has improved, you may be denied a bank account based on your past banking history.
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How Can I Get A Bank Account If I Am In Chexsystems
You may not be aware that you have a ChexSystems report until you apply for a bank account and are denied. If you’ve been told that you can’t open a bank account because of negative ChexSystems reporting, the first step is to request a copy of your Consumer Disclosure. Again, this is available to you at no charge.
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How Can I Tell If I Am In Chexsystems
Just like credit bureau reports, Federal law says that consumers are allowed to get one free copy of the Chex report every year, and/or every time they are denied a product at a bank due to what is on their Chex report.
We recommend customers get in the habit of pulling their credit reports and Chex reports once a year set a reminder on your calendar and then pull them all at the same time.
Copies of your Chex report can be ordered on the Chex website.
What Is Chexsystems And How Does It Work
ChexSystems gathers banking records on all consumers that have a bank account currently or in the past. There is no refuting that banks must have a screening process for new customers, but the problem with ChexSystems is that it only reports negative information unlike credit reports that can contain negative as well as positive information.
A one-time banking mistake could land you in ChexSystems with no positive reporting information to offset it. That one-time mishap can stay on your ChexSystems record for five years and prevent you from opening a checking account.
Because ChexSystems is a consumer reporting agency the information they contain must be accurate. Just like the credit bureaus, they are governed by the Fair Credit Reporting Agency.
Even though ChexSystems is a specialty consumer reporting agency, it is required to respond to consumer disputes in the same manner as credit bureaus. Check out our step-by-step process to dispute ChexSystems.
Even if you’re successful in finding banks that don’t use ChexSystems, over 80 percent of banks and credit unions screen new customers using some type of consumer reporting agency. Checking account reporting companies are difficult to avoid whether you want to open a bank account online or in-person. Its a good practice to order your ChexSystems report, free of charge, and make it a habit of monitoring what banks are reporting about your checking habits.
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