What Gets Reported to ChexSystems?
If you've ever had a bank account closed due to insufficient funds, it is reported to ChexSystems. If you've ever bounced a check, it gets reported to ChexSystems. Bankruptcy is typically reported to ChexSystems by your financial institution. It doesn't matter if you made an honest, one-time-only mistake, or if an emergency situation forced your hand. It doesn't matter if your credit has always been good, or that you've been banking with the same company for 25 years – it's arbitrary. It's purely up to the account executives discretion whether or not a particular monetary indiscretion lands you in the hot seat with ChexSystems. However, it is also within the account executives power to take you off that list.
Keep Yourself Informed
Knowing what information ChexSystems is looking for can be useful in creating an argument to persuade an account executive to remove your name from the ChexSystems list. Typically, your average bank or credit union will add your name to ChexSystems if they close your account involuntarily. A negative balance over an extended period, excessive overdrafts, outstanding balances, or fraudulent activity are ostensibly the reasons that banks and credit unions report someone to ChexSystems, Inc. However, more and more people are finding themselves on the ChexSystems list for minor infractions of the rules. Whatever the reason, once an account is closed by the bank, the account holder’s name, along with a reason for the closure, is reported to ChexSystems. Understanding your rights as a client of the bank will help you to make a solid argument for having your name removed from the list. You need to understand that the list was not created in order to hassle any citizen that accidentally overdrafts on their account. The system was created in order to keep notorious frauds from exploiting the system again and again. See the difference? You have every right to argue with any bank you are currently, or have previously, done business with when it comes to the matter of what gets reported to ChexSystems.
Paved with Good Intentions
It's remarkable how something that was created with the intention of protecting a business against possible fraud has been transformed into something that unduly discriminates against the average citizen. There's nothing wrong with a system that tracks the names of account holders who have reported lost or stolen checks in order to track the occurrence of claims – this can help protect a business and an individual against fraud. ChexSystems also tracks the number of times a person applies for a new account within a 90-day period. This information is used to check whether an abnormal number of new accounts were acquired within a short time, which indicates possible check cashing or kiting schemes. These things happen. It's an unfortunate reality, and there will always be someone ready to take advantage of a system.
It's not right for banks and credit unions to misuse this system to ruin the financial future of citizens so liberally. If the system is going to exist, then it needs to have checks and balances. The only way that can be done at this time, is by your efforts. If you are the person who has been added to the list, remember what the system is there for. Remember that not everything that gets reported to ChexSystems is legitimate. File a ChexSystems dispute. Know that you have the right to fight back.
