Can I Open a Bank Account if I'm in ChexSystems?

If you owe a bank or credit union money, you may be listed by ChexSystems Inc., a consumer reporting agency, in their database, causing other financial institutions to reject your attempts to open a checking account with them. But there are ways you can get around that problem.

First, you can request your ChexSystems report, look through it and dispute any errors. You can also open a second-chance bank account in any financial institution that offers it, or open an account with a bank or credit union that doesn’t use ChexSystems reports, or get a prepaid debit card. Alternatively, you can get some financial education, pay off your debt and request that the bank to whom you owe money remove you from the database.

Banks or credit unions may list their former account holders in the ChexSystems, if the customers fail to pay the money they owe. That may happen if you issued or tried to cash a bounced check, were a victim of identity theft or had unpaid balances such as overdraft fees. A ChexSystems report works like a credit reporting agency, enabling other financial institutions to watch out for risky potential account holders.

Below are strategies you can use to open a checking account even after being listed in ChexSystems.

According to the Consumer Financial Protection Bureau, the Fair Credit Reporting Act gives you the right to request for one free copy of a report every ​12 months​ from a consumer reporting agency such as credit bureaus. That is why ChexSystems gives you the right to request a copy of your ChexSystems report if you have been denied an account because you're in its database.

Therefore, you can request your ChexSystems consumer report online via the ChexSystems website or by other methods such as phone or mail. Then you can go through the report and file a dispute if there is inaccurate information in it. In such a case, you should also provide all the necessary supporting documents like receipts showing that you paid what you owe. If you prove your case, ChexSystems will remove you from their database, and you can open a bank account in the financial institution of your choice.

Some banks and credit unions don’t use your banking history when vetting a potential client, allowing you to open a bank account even when you are listed in the database. In addition, some banks or credit unions offer second-chance accounts.

Experian describes second-chance checking accounts as being available to those who can’t open a checking account normally, such as the incarcerated and underserved. So even if an institution is aware that you are in ChexSystems, they might still give you a chance anyway. Of course, everything depends on whether you meet other eligibility criteria.

According to CreditMashup and LendEdu, some of the institutions you can open an account with while being in the database include:

• Navy Federal Credit Union
• SoFi Bank
• TD Ameritrade
• Suntrust Bank
• PeopleCashSolutions
• Current
• State Department Federal Credit Union
• 1st Convenience Bank
• Southwest Financial Federal Credit Union
• First American Bank

It is worth noting that some of the banks that offer second-chance banking may have more restrictions.

It would also help to get a prepaid debit card. They tend to offer many banking services associated with a regular bank account. You can use them to automate payments with bill pay, withdraw money from ATMs, deposit money with direct or mobile deposit and even earn cash back on eligible purchases.

Another strategy is to pay off the debt you owe the bank or credit union that listed you in ChexSystems and then request for de-listing.

Credit counseling agencies usually offer financial education to people struggling with money management. So, you should consider taking an available course, and then using your newfound knowledge to pay off your outstanding balance. After that, you can talk to your bank manager, explain your situation and request that they remove you from the database. Alternatively, you can provide that information to ChexSystems directly when lodging a dispute.

Remember, though, that ChexSystems reports stay in the database for up to ​five years​. However, if the bank requests that the agency remove you, it may do so, allowing you to open another bank account with minimal hassles.

It is worth noting that even if you manage to open a checking or savings account while you are in ChexSystems, you may still be in trouble. If the financial institution lets your debt get handled by a debt collection agency, your credit history may be affected negatively when your credit scores go down, making it more challenging for you to get credit cards or other loans in the future. In addition, your annual percentage yield (APY) could go up, causing you to get credit at very expensive rates.

Paying off the debt you owe will not remove you from the ChexSystems database. You will be removed automatically after five years.