How Long Is a Bad Check in ChexSystems?

How Long Is a Bad Check in ChexSystems?
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ChexSystems is a consumer reporting agency that collects and distributes information about consumers who’ve experienced difficulties with checking and savings accounts at banks and credit unions. Only problems, such as bounced checks and unpaid balances, appear in the ChexSystems database. Those problems remain on file for ​five years​, although the reporting financial institution can request a quicker removal. A bank may deny you a new account if your name appears in ChexSystems.

Understand the ChexSystems Dragnet

Banks report various items to ChexSystems, including:

  • Bounced checks
  • Overdrafts
  • Involuntary account closures
  • Unpaid balances
  • Abuse of bank accounts, bank cards and ATMs
  • Possible cases of identity theft or suspected fraud
  • The number of new bank accounts you have recently tried to open

Banks report these items to protect the financial community from risky new accounts. Typically, a bank will reference ChexSystems when you submit an account application and deny your request if your name appears. However, certain banks and credit unions offer “second chance checking accounts” so that consumers appearing in ChexSystems can open a new account with limited services (i.e., accounts without overdraft protection, direct deposits or checks).

Losing full banking privileges is a hassle and may make it harder to pay bills. Until the problem goes away, you might want to use a reloadable debit card to pay for purchases.

View Your ChexSystems Report

The best way to check your ChexSystems status is to request a copy of your report. According to the Fair Credit Reporting Act, you can get a free copy of your ChexSystems report ​every 12 months​. You can get a free copy sooner if a bank denied you a savings or checking account in the ​previous 60 days.​ The bank must also explain the denial.

You can request a copy of your ChexSystems report in several ways:

  • Call the agency at (800) 428-9623
  • Visit the ChexSystems website
  • Send a fax to (602) 659-2197
  • Mail a downloaded form to ChexSystems Inc., Attn: Consumer Relations, 7805 Hudson Road, Suite 100, Woodbury, MN 55125

It takes about ​five days​ to receive the report via the mail, but you can view it sooner by requesting it by phone or online.

Fix Your ChexSystems Report

Once you receive your report, you can scan it for any negative information preventing you from opening a bank account. ChexSystems says you can dispute inaccurate information online or in writing.

You must provide information about each disputed item, including why it’s false and documents to prove your case. The agency must investigate and decide the dispute within ​30 days​. If you prevail, the agency will remove the incorrect information from your ChexSystems record.

If you find valid negative items, you may be able to take remedial action. For example, you can pay off any open negative account balances and overdue fees. Collect receipts for all payments and submit copies to ChexSystems so that it can update your records.

You can also ask your old bank to request the agency remove the item from your report before the five-year period expires. ChexSystems may decide to comply with the request but need not do so.

Assess the Effects

Generally, items on your ChexSystems report do not directly affect your credit score. However, your score could suffer if you have a negative balance that the bank has referred to a collection agency. A debt collector can report you to the credit reporting agencies, where the item will damage your credit score and remain visible for seven years. This can damage your personal finances by making credit (i.e., loans and credit cards) less accessible and more expensive.

To avoid future problems, focus on good financial habits, such as actively monitoring your account balances (for example, with a mobile banking app), using overdraft protection and regularly checking your banking reports and credit score. Responsible behavior can help you avoid future banking problems.