An Introduction To ChexSystems, Inc

If you spend any amount of time on this blog you’ll notice that I mention ChexSystems a lot (often wrongly referred to as check systems or chex systems), especially when talking about new bank account bonus promotions. In today’s post we’re going to be looking at what ChexSystems actually is and other important information.

What Is ChexSystems?

ChexSystems is national consumer credit reporting agency (CRA’s, similar to Equifax, Experian & TransUnion) that is comprised of the majority of credit unions and banks (up to 80% of financial institutions are members). It is owned by Fidelity National Information Services. They share information through ChexSystems about saving & checking accounts (deposit accounts).

Unlike other CRAs ChexSystems only contains negative information (they do contain some neutral information such as new account inquiries). When you apply for a new bank account your information will be run through ChexSystems. If a consumer has a single negative item on their ChexSystems report they’ll likely be denied for a new bank account.

Negative items include but are not limited to:

  • Unsatisfied balances
  • Check overdrafts
  • Depositing fraudulent checks
  • Suspicious account behavior reported by other banks (e.g possible structuring)

Negative items last for a period of five years, before falling off ChexSystems.

Obtaining Your ChexSystems Report

Because ChexSystems is legally considered a consumer credit reporting agency, they are required to give consumers access to their credit report for free under FACTA once every twelve months. Obtaining your report is easy and can be done online, by post or by phone. They’ll send you out your report within 5 business days of receiving your request.

By Phone

Call 1800-428-9623

By Mail

Print and complete this order form. Then send it to the following address:

Chex Systems, Inc.
Attn: Consumer Relations
7805 Hudson Road, Suite 100
Woodbury, MN 55125

Online

Click here to start the online process.

Tactics To Avoid Having Negative Items On Your Report

  • Always balance your check book
  • Avoid going into overdraft
  • Never close a bank account with a negative balance
  • If you’re struggling to balance your check book or are going into overdraft, contact your bank directly and make an effort to correct your mistakes

Clearing Negative Items

If you have a negative item on your ChexSystems report, it is possible to get it removed. There are two different options depending on whether the negative item is valid or invalid.

  • If the negative item is invalid, incomplete or incorrect you can dispute the item with ChexSystems to have it removed. They have 30 days to correct the information.
  • If the negative item is valid your best bet is to contact the financial institution that reported the negative item in the first place. In most cases places will be willing to remove the negative item if you pay back all money that is owed including fees, the only time that this really isn’t the case is when fraud is involved. If the bank/credit union agrees to remove the negative item if funds are repaid make sure you get this in writing, that way if they don’t follow through with the removal you have documentation stating they would. It’s important to note that they have no obligation to remove the item if you pay the money owing, they must mark it as paid though.

To dispute information with Chex you must complete this form and then fax it to or send it to the following mailing address:

Chex Systems, Inc.
7805 Hudson Road, Suite 100
Woodbury, MN 55125

You can now dispute online as well.

F.A.Q’s

Can I still open a bank account if I have a negative item on my ChexSystems report?

You can, but it’ll be much more difficult. Some banks that use ChexSystems will approve you if the offence is minor (e.g an overdrawn account) and some banks don’t use ChexSystems at all. Instead they might require you to take a short checking course (usually half a day) that teaches you how to balance a check book. Alternatively they’ll charge higher fees.

In the coming weeks we’ll be adding a list of banks & credit unions that do not run your ChexSystems report.

What happens if I open too many bank accounts?

Almost every time you open a new banking account, your information will be run through ChexSystems. Other banks can see these inquiries and most of them have an automatic fraud level. If you have over this fraud level of new accounts opened within the time frame (usually twelve months) you’ll be denied for a new account.

The number of new accounts opened varies from bank to bank (or credit union) and is an internal algorithm, rather than something in built to ChexSystems. Financial institutions do this  because when somebody’s identity is stolen one thing that is often done by the thieves is bank account openings to write bad checks, overdraw the account or engage in check kiting.

Obviously the more new deposit account openings you have, the more likely you are to be denied due to too many new accounts. This also happens with traditional credit reports and too many new inquiries (e.g credit card issuers will deny you if you’ve applied for too much new credit recently – although this is usually done due to risk prevention rather than fraud prevention).

In general you won’t run into any issues with 6-8 bank inquiries in a year and shouldn’t have any issues until you have 12+ inquiries in a single year. But some banks are more inquiry sensitive than others, just like credit card issuers. We’re trying to build a list of financial institutions that are inquiry sensitive, you can help us by commenting below. Include the number of new accounts you’ve opened in the last twelve months  and the financial institution that denied you, please only include this information if you have no negative items on your report.

You can view what banks/or credit unions are inquiry sensitive on this page.

Got Another Question?

Feel free to ask below in the comments, alternatively ask the nice folks over at creditboards on their dedicated sub forum for ChexSystems.

Account opening inquiries stay on your report for a period of three years.

 
    William Charles
  • On May 28, 2014, 11:13

View Comments (185)

  • How many new accounts is too many? How low can I let my Chex score go before I should stop?

    I've opened 12 checking accounts in the last 3 months after not opening one previously in years. , I've seen my Chex score drop at least 100 points from ~620 to ~520 since I began tracking it,

    I started with the goal of collecting a single $500 bonus from Key Bank, and this has turned into a mini hobby / obsession over the last month. I'll be sad when I have to stop.

    • You never really have to fully stop. You may have to slow down for some banks. Some banks don't care about your inquiries are or your Chex report.

      "Too many" is when you can no longer keep up with the admin of doing it all.

  • I see lots of people mentioned Chex and CBs frozen before jump a new bank bonus.
    
    Maybe this is a stupid question, but I do not know what is the benefit to setup the Chex and CBs frozen?
    I think most credit card company will NOT approve the new card application if the CBs frozen, am I right?
    I know lots of banks will do Chex check when you apply for a new deposit account. How many percentage of banks will approve your new deposit account application if the Chex frozen?
    By the way, I only applied 3-5 credit card and 3-5 bank accounts in last 2 years.
    But I did apply 10-20 new bank accounts and credit cards in a single 12 months period several years ago.
    Thank you very much for your comments!

  • Any chance that disputing duplicate Chex inquiries (for same application) will harm relationship with that financial institution? Wondering if I should wait to dispute a duplicate until after I receive the bonus @guest_531913 @guest_1700717

    • I would wait. After Chex forwards your dispute request to the bank, someone at the bank will take a look at your records and accounts (if the bank intends to respond). There is the possibility a human may not interpret the situation correctly and they may mistakenly associate it with fraud, leading to unintended consequences. @guest_1933894

    • I only had it happen once where I had any pushback from a bank/credit union for disputing an inquiry. It was with Midland States Bank. They locked my account for disputing a duplicate Chex inquiry 2 years ago, but was easily fixable by calling. They assumed my dispute was my way of claiming fraud. I still got the bonus. To be fair, they are known for locking accounts... there were several DP's with that bank, not related to Chex disputes.

      So, just in case, might be best to wait until after the bonus posts, but I think it's pretty rare to have any issues. I have disputed numerous others and never noticed any other negative actions. @guest_1933894

  • Thanks for the thorough explanation! Just checked my report for the 1st time & was surprised how quick an inquiry appeared on there for the Truist bank account I just opened today.

  • Anyone else have a monthly soft inquiry from Credit Karma through Transunion? Not sure where its coming from since I don't recall signing up for anything. I just cancelled my CK account but was wondering if this is a common thing

  • I have been doing bank bonuses since 2022. So I am fairly new. I have never been declined by a bank based on a Chex Inquiry except with Banner Bank. I got my Chex report today. There are no negatives (ie. unsatisfied balances, check overdrafts, depositing fraudulent checks, or suspicious account behavior). However, of course I have multiple bank inquiries under “Inquiries Viewed by Others.” My questions are:

    1. How come Meriwest has 3 inquiries under “Inquiries Viewed by Others” when I only applied once to them? Should I dispute the other two inquiries? Other banks seem to have multiple inquiries as well although I only submitted 1 application?
    2. Since I have been declined by Banner Bank that uses Chex Systems. I assume I will also be declined by other banks that uses Chex. When can I open a bank again that uses Chex?

    • 1. Yes, you can dispute, which does not necessarily guarantee success. For one application, a bank should only inquire your Chex report once, so you have a very good reason to ask them to remove other inquiries. Some banks may pull your Chex report even before you click Submit, so it is possible a bank may pull your Chex report multiple times if you play with the application form too far ahead multiple times but only submit it in your last attempt.

      2. No, different financial institutions have different approval criteria and different levels of sensitivity to your Chex inquiries. Feel free to continue to chase other banks, just be aware that some Chex-sensitive banks may decline your application which is completely normal.

  • I think I just figured out why I may get "Identity Can't be Verified" on some applications. I was looking over my Chex Report and noticed on the "Social Security Number Validation" that it shows my 'SS# Became available for ISSUANCE in 19XX in My State of Birth', which doesn't match my birthdate. I was born 10 years earlier. I am guessing my parents must have gotten the card issued when I was a child and not when I was born. So maybe this date difference is causing Identity problems.

    • I am surprised you have not seen this before on the knowledge-based questions banks/CUs throw up to verify identity, as I get that one all the time. But now that I think about it, P2 does not.

      Per Wikipedia... Before 1986, people often did not obtain a Social Security number until the age of about 14,[7] since the numbers were used for income tracking purposes, and those under that age seldom had substantial income.

    • @guest_1700619 That's normal. Back in the day, people didn't need an SSN to claim the child on their taxes. My number was issued when I was about 10 y/o, which if I had to take a guess, was probably when my parents set up a savings account.

      Other random SSN trivia... The first three digits are the area number. The next two digits are the group number. The final four digits are the serial number. So, you can tell what area someone was from when they got their card issued.

      https://www.ssa.gov/policy/docs/ssb/v45n11/v45n11p29.pdf

  • how to get notifications for each chex pull? I have created account and to my knowledge I have enabled text notifications. But I never get them!

      • I just signed up and got the essential version for a year. So, does Onalert just email me any time there's a new chex inquiry?
        Also, the comment with the link said "until 12/31/23". But if this version is the right one, it's still active.

        • Yes, you get an email about new bank activity.

          New Bank Account Inquiry Alert
          Gadget,

          An attempt has been made to open a new bank account in your name. This alert is to inform you that a financial institution accessed your ChexSystems consumer report information in order to open a new checking or savings account.

          Change: New Bank Account Inquiry
          Company: SAN FRANCISCO FIRE CREDIT UNION
          Inquiry Date: January 31, 2024

          What should I do now?
          If you recognize this activity, you do not need to take any action. If you do not recognize this activity, please log in for more information.

          If you signed up, apparently it's not expired.

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