Yes, you can open a bank account after being reported to ChexSystems by applying for a "second-chance checking account" or using a bank that does not use ChexSystems for screening. While negative records stay for up to five years, many financial institutions offer specialized accounts with lower limits and, often, monthly fees to help you rebuild your banking history.
Opening an account with a ChexSystems report
Some financial institutions may deny everyone who has a ChexSystems report, while others may only deny people with certain types of activity. ChexSystems itself does not approve or deny applications; it merely provides reports to financial institutions.
If you've had an account closed due to unpaid fees, bounced checks or suspected fraud, that information stays on your ChexSystems report for 5 years and can block you from opening new accounts at most mainstream banks.
Opening Bank Accounts with Poor ChexSystems History
There are several reasons a bank can deny you a checking account. Here are two common reasons: Prior issues with having a checking account, such as writing bad checks and having a bank to charge off the account. Unable to provide sufficient identification at account opening.
Our current practice is to retain record of reported information for a period of five years from the report date unless the source of the information requests its removal or ChexSystems becomes obligated to remove it under applicable law or policy.
If denied a bank account, find out why (often a ChexSystems report), correct any errors, pay off old fees to clean up your banking history, and explore "second chance" accounts or basic bank accounts that are easier to get, or consider prepaid debit cards and credit unions as alternatives.
Second-chance checking accounts allow those who have been denied a traditional account to open a specialized one to help them build a strong financial foundation. Financial institutions offering second-change checking accounts include Capital One, Chime, GO2bank, GTE Financial, Fifth Third, Varo and Wells Fargo.
Ask creditors to update information
Once you've paid your debts, ask the collection agency or other creditor to update your file on ChexSystems. Get payoff information in writing and keep track of receipts or other documents that show you've paid the debt.
ChexSystems is a specialty consumer reporting agency that tracks consumers' deposit and debit history, similar to a credit bureau. Overdraft fees are a major contributor to negative reports on ChexSystems, and can result in being denied a bank account.
The severity of the issue, the credit reference agency, and the reported information can determine how long you are blacklisted. Negative information on your credit record normally stays for six years before being deleted.
Consider a second-chance checking account
Some banks offer second-chance checking accounts, which are accounts you can open even with a negative banking history. These accounts generally have more limitations and fees than standard accounts. For example, they may not come with checks or overdraft protection.
You may have negative information in your file if you had a checking account before and you: Have an unpaid negative balance on that account, such as from an overdraft, that you have not repaid and the account was closed by the bank or credit union (this is called an “involuntary closure”).
If you want to have your information excluded permanently, you may print, complete, sign and return a ChexSystems Permanent Opt Out Election form. Please complete the entire form. Failure to provide complete and accurate information may prevent the processing of your request.
There's no defined “”good”” ChexSystems score, but a score of 581 or higher generally indicates approval for a new checking account. Improve your ChexSystems score by addressing negative marks on your report, practicing responsible banking habits, and potentially opening a second chance account.
ChexSystems tracks negative banking history for up to five years and is used by over 90% of U.S. banks and credit unions to screen new accounts. You can get a free ChexSystems report annually and dispute any errors, which must be investigated within 30 days under federal law.