ChexSystems, formerly known as Chex Systems, Inc, is an agency located in Delaware that reports to credit agencies on how customers handle their bank accounts. Essentially, when an overdraft to a bank remains unpaid, and if the bank account is closed, ChexSystems reports this information to credit agencies like Equifax, TransUnion and Experian. This can affect a person’s ability to open future bank accounts, since about 8 out of 10 banks and credit unions use ChexSystems to find information on customers.
Normally, when a customer hasn’t used a bank account fraudulently, like depositing fake checks or not clearing up overdraft payments and any fines, ChexSystems doesn’t have a record or your account history. If you have a history though of writing bad checks, not paying them or having bank accounts closed due to suspected illegal activities, you may not be able to open a new savings or checking account. This is not always the case. Some banks disregard the information if the amount was small or if the infraction occurred several years ago. Each bank sets their own laws regarding this and some don’t use the system.
In addition to working as a credit-reporting agency, ChexSystems can work as a collection agency, and attempt to collect money from people who have left a bank or had their account closed with large overdrafts outstanding. Some banks use other collecting agencies for this purpose, or attempt to collect the money on their own. One problem with this system is that many people do clear up their overdraft amounts and still show up as having an unpaid overdraft in the system.
What ChexSystems and the bank you repay may not do is clear up the fact that you are still showing up with an overdraft. The company website asserts that reporting members (banks) don’t have to report if the problem has been resolved. If the amount is collected through the company’s agency though, this must be noted. You may be unaware that a report still exists, but you can order a report from ChexSystems to verify whether you still show an unpaid balance or a bad report.
The best way to figure out if you have a problem is to read the report requested, and see if you owed money to a bank or to the company’s collection agency. Show them proof once you have resolved the problem and request that ChexSystems clear your account. This may not always work, and you may still show that you had an account in default, though often once the matter is settled and you can prove it to the company the report is removed.
If they won’t remove the report, or if you believe this amount is in dispute, you can attach a personal statement to your report, which may or may not be regarded by other banks or credit unions. Most often though, in order to get your account clear, you must pay any money owed and then make sure that the company removes the report. Check back in a few days and ask for a report verifying the matter has been handled.
