If your ChexSystems report is preventing you from opening a new bank account or credit card, you may be wondering how to clear your ChexSystems report.
In most cases, all you can do is wait until those black marks drop off your record. You can’t force ChexSystems to delete your report or remove an accurate entry.
There are other ways to improve your ChexSystems report and score, such as disputing information and settling chargeoffs.
In this article, we’ll explore what ChexSystems is, how to clear your ChexSystems report, and what steps to take if you absolutely need to open a new account now.
What Is ChexSystems?
ChexSystems is a consumer reporting agency that collects information on your banking history.
While ChexSystems is not a credit bureau like Experian or TransUnion, the information they store can be used to make credit decisions. When a bank or lender pulls from ChexSystems, they receive the information from your report and your ChexSystems Consumer Score.
This information can be used to determine the risk you pose to a bank. The better your ChexSystems report and score, the less risk you pose.
What Information Does ChexSystems Collect?
ChexSystems collects various information related to banking history, primarily the opening and closing of bank accounts.
- Involuntarily closed accounts, which can be the result of chargeoffs or suspected fraud.
- Inquiries – both hard inquiries (when you apply for new accounts) and soft inquiries (that don’t affect your credit).
- Check activity – including returned (bounced) checks, check ordering, and inquiries related to check cashing.
ChexSystems does not collect information on your current checking/saving account balances nor store data on previously held accounts that were closed voluntarily (unless the account had suspicious activity before it was closed).
Who Uses Chexytems?
Nearly any bank, lender, or creditor can pull ChexSystems, but it is most often used by banks.
Banks pull this information when you apply for an account with them. Depending on the information and score they get back from a ChexSystems check, they can choose to deny your application or change the terms offered (i.e., remove a new account cashback promo).
Some lenders also use ChexSystems. This is most common with companies that offer debit cards that report like credit cards or cards advertised as having no credit check or minimum score. These companies often use alternative credit data, which can include pulling a ChexSystems report.
How to Check Your Report
As a consumer reporting agency, ChexSystems has to abide by the Fair Credit Reporting Act (FCRA).
This means you can obtain a copy of your report for free directly from ChexSystems once a year. You can also obtain a report if you have been hit with a negative action (i.e., denied a new checking account) because of information in your ChexSystems report.
To request a copy of your report, go to the ChexSystems Consumer Disclosure page and use the submit request tool. This tool gives you options for requesting a report online, by phone, or via mail.
You can also request your ChexSystems score through the Consumer Score page.
How to Clear Your ChexSystems Report
Unlike other credit bureaus that collect information on all of your credit activity, good or bad, the majority of the data that ChexSystems collects is negative data.
This means that the emptier your report, the better. But how do you clear your ChexSystems report?
Dispute The Information
If you’re wondering how to clear your ChexSystems report, especially when the negative items reflect fraud, mistaken identity, or other errors, initiating a dispute with ChexSystems is an effective first step.
To begin a dispute, use the ChexSystems Dispute page. Here, you can fill out your information, select the item you are disputing, and detail why the information is inaccurate. Depending on the reason for your dispute, you might need to attach documents to your dispute, such as:
- A death certificate
- Police report
- Account statements
According to ChexSystems, dispute investigations are usually completed within 30 days but can take longer.
If your dispute is denied, you may have the option of adding a statement to your ChexSystems report. With this 100-word max statement, you can describe your dispute issue. This statement will be visible to anyone who pulls your ChexSystems report.
Settle Charge-Offs
Another step you can take when thinking of how to clear your ChexSystems report is to settle charge-offs. If you have had a bank account involuntarily closed with a balance due remaining, this will appear as a charge-off on your ChexSystems report.
Charge-offs are not good for your ChexSystems score.
If the charge-off information is inaccurate, you can use the dispute process. Otherwise, your best option for score improvement is to settle the account.
Paying off the balance due will not result in the account being removed from your ChexSystems report. Instead, the account will be updated to show as paid in full or settled. If you pay off the account and your report is not updated, you can file a dispute.
You can try to negotiate with the financial institution to remove the account from your ChexSystems report after you pay off the balance, but they are under no legal obligation to do so.
Wait for Negative Items to Fall Off
The final strategy on how to clear your ChexSystems report is to simply wait for negative accounts and items to fall off your report. The time it takes for this to happen varies based on the type of item.
- 2 years – check cashing inquiries fall off
- 3 years – account inquiries fall off
- 5 years – closed account information falls off
If you have information that is getting ready to fall off soon, you might have better luck waiting a little while before opening a new account.
What to Do When You Have a Bad ChexSystems Report
If you have a less-than-stellar ChexSystems report, this can adversely affect your chances of successfully opening a new bank account or obtaining certain credit cards. But how can you clear your ChexSystem report when disputing, paying off accounts, or waiting are not options?
How to Open a Bank Account
If your ChexSystems report isn’t too terrible, you may be able to apply for some basic checking and/or savings accounts without issues. However, this may limit your access to certain promotions or APY rates.
Otherwise, you might want to consider looking for a second-chance account. These accounts are specifically designed for those who have a poor ChexSystems record. But beware, these accounts can come with hefty fees or limited features (i.e., no check writing).
Opening a second-chance account won’t necessarily improve your ChexSystems score, but they can offer you basic checking/saving services until your score improves enough to open a better account.
Improve Your Credit
If your ChexSystems report is preventing you from opening a credit card account, then looking for different products that don’t use this option might be a good option.
However, cards that don’t use ChexSystems may have higher credit requirements, so you’ll want to look at improving your credit score as needed.
You can do this in multiple ways, including:
- Opening credit builder loans
- Using services like Experian Boost
- Keeping your credit utilization low
- Using rent reporting services
- Opening a secured credit card
While your ChexSystems report is important, focusing on improving your credit report may be even more important for your long-term financial health.
FAQs
Information on your ChexSystems report won’t remain any longer than 5 years. Some information, like records of inquiries, falls off even sooner, at 2 – 3 years.
The scoring range for the ChexSystems Consumer Score is 100 – 899. The higher your score, the more creditworthy you are considered.
Each bank or creditor establishes their own cutoff for what score is good enough. While there is no set rule, a score of 600 or higher would likely be considered good enough for most banks.
If you receive a score in the 9000s, I.E., a score of 9999, there is something wrong with your ChexSystems report. In most cases, this results from not having enough information on you to generate a score. A score in the 9000s can also be the result of fraud.
You cannot remove your entire record from ChexSystems. Even if you were the victim of identity theft, you cannot remove your file.
The best you can do is to work on clearing up your ChexSystems report by disputing all inaccurate information. You can also set up a credit freeze and add a statement to your report (if available) to notify anyone who pulls your report of your unique situation.
Even when you die, your ChexSystem file will remain. Your file will stay up until everything on it has fallen off.
ChexSystems is not the only consumer reporting agency collecting information on your checking/saving account history.
Two main ChexSystems competitors are TeleCheck and Early Warning Services (EWS).
TeleCheck mostly records data on check-writing, i.e., how often you are bouncing checks.
EWS was created through a banking collaboration with big names like Chase and Wells Fargo. This company offers a variety of services, including identity verification, account risk prediction, and Zelle services.
