What Can Cause You To Get Reported To ChexSystems?

It’s common knowledge that having your name appear on Chexsystems’ database means that most banks will refuse to open you a checking account. Chexsystems is a reporting agency that provides details of poor consumer banking history to its subscribers. What’s less known is exactly what kind of situations can lead to your information being sent to Chexsystems. Here’s a partial list of incidents that can land you in this bad position.

• Unpaid overdrafts. If your bank paid one or more transactions for you while you didn’t have the money in your account (which is know in the banking vernacular as paying on insufficient funds), they expect you to pay back the amount that they paid for you, plus applicable overdraft fees. If, for any reason, you fail to pay the bank back, they will close the account report the incident to Chexsystems. Other banks will view you as a “risk” and most will deny your application if you try to open new checking accounts with them.
• Repeated overdrafts. This is when you start setting a pattern of overdrawing you account on a regular basis. You might think you’re OK because you always pay the overdraft, and because you reason that the bank also makes money because they collect overdraft fees from you. But the bank might not see it that way. They may reason that you have poor money management skills and that sooner or later you will not be able to meet your obligations. When that happens, they close your account and invite you to bring your business elsewhere. Of course, the incidents are reported to Chexsystems. You know the rest.
• Fraudulent transactions. People who indulge in fraud, whether it be bad checks, debit and/or ATM card fraud and the such, are reported to Chexsystems.
• Identity theft. Sometimes it’s not you, but someone else who steals your identity and then proceeds to do all sorts of bad things while using your information. In these cases, you may have a reprieve, but still it’s a serious situation in the time period between when it blows up and when you’re finally able to clear your name.

We’re not going to get into the fraud scenario. Suffice it to say that even banks that do not use Chexsystems often have a provision that excludes you if you come to them because you’ve been frauding. Identity theft is also a rather particular situation. It does cause Chexsystems problems, but those problems are not the result of you mismanaging your money. For the other situations, there are products and services out there that meet your needs, and that you can even use to improve your money management and avoid falling into the same situation in the future.

Second Chance Checking Accounts

Whether you’ve been reported to Chexsystems because of unpaid overdrafts, repeated overdrafts, or because someone has stolen your identity, you can’t just sit there and wait five years for your name to be taken off their database. You need to find banking services where you will be able to carry out most financial transactions even though you’re on Chexsystems. We’re talking about direct deposit, debit card, withdrawals and deposits at ATMs, online bill pay, and so on. Since the number of people that are locked out of the traditional banking circuit is pretty large, a number of banks have identified it as a potential market.

In response, many financial institutions have shifted their stance and there are now many banks that don’t use ChexSystems at all to evaluate new customers; some others still do, but do not base their decision solely on what the database says. These banks use this fact as a selling point to attract prospective customers who may have had trouble getting approved by traditional banks. These banks refer to those “different” checking accounts as a second chance checking account or fresh start checking account.

What should a second chance checking account provide?

• The ability to deposit, withdraw, and transfer money from your account
• A debit card with the Visa of Mastercard logo that enables you to make purchases everywhere and also withdraw money from any ATM
• Check writing privileges (sometimes)
• Low opening balance, and no minimum balance requirements
• Low monthly maintenance fee.

Think about it: these days, without a bank account, your options are severely limited. For example, if you get a new job, you may be required to give your employer your account number to receive payments. Some corporations won’t send out checks anymore!

For those people who don’t have any options, a second chance checking account gives them a second chance at a bank account. With good use, you can even use a second chance checking account as a stepping stone to open a normal account in a six to twelve month time frame, provided that you show discipline in how you’ve managed your account during the time that you’ve had it.

Make sure you do plenty of research before actually getting a second chance bank account. There are different type of second chance accounts and you want to make sure you choose the one that best fits your situation.

© Reported To ChexSystems? Try Second Chance Checking Accounts

One of the reasons why I started this website is that I have been meeting with a lot of people who insist that being able to open a checking account once you’ve been reported to Chexsystems is the closest thing there is to mission impossible, whether it be finding a local non-Chexsystems bank or an online bank that doesn’t use the Chexsystems reporting information to open new checking accounts. It’s easy to understand why so many people people would believe that, since the “big” banks typically will not do business with you once you’ve been reported. You’re left with the only option of looking for other, smaller banks, and the information is not readily available. And let’s not forget scammers who will try and sell you outdated lists, that will do nothing to help you in your predicament.

It certainly is frustrating to look for weeks and weeks and just keep getting turned down, so at that point you start thinking that you’re probably fighting a losing battle. You think that you may just have to deal with it and settle for those awkward “solutions” that are touted as alternatives for people who can’t open checking accounts because of Chexsystems. To be totally honest, finding a non-Chexsystems bank is not the easiest thing, but with some useful information in hand, you can already start narrowing down your search and be more productive. In order to improve your chances of success when negotiating with banks, order your chexsystems report to see what information is in it and try and resolve any issues first.

The first thing you need to know is that you should definitely not expect any bank to openly advertise which reporting system they use (if any). If they did, they would be just opening a can of worms. They would be swamped with new people who want to open checking accounts, but they would have to sit there and sort through hundreds, if not thousands, of applications to handpick the ones that look promising. It’s just not cost-effective. What you can do, though, is take your yellow pages and start calling and asking. The trick here is to ask for the branch manager or someone in the branch who ranks high enough to give you the information that you’re looking for. Also, if you can, try to sweeten the deal. If you have a little bit of savings that you an open a CD with, mention it. Stuff like that will make you look more appealing as a customer and they’ll probably be more inclined to cut you a deal.

Of course, whichever banks that do not use Chexsystems that you find in your search, and that you’re considering depositing your money in, absolutely has to be an FDIC-insured bank. There’s simply no way around that. If you fail to take this precaution, and the bank happens to go under, you will lose all the money that you deposited there. On the other hand, with an FDIC-insured bank, your money is insured up to $250,000 per account holder (It has been bumped to that level amid the financial crisis and it has been hinted that it might be reverted back to the previous $100,000 once this is all over). Not a bad safety net.

In your search to open a non-Chexsystems checking account, you have to be on the lookout. You will find a lot of information out there and what we recommend is that you gather as much of it as you can. The trick is to avoid getting scammed for large amounts of money. If you find something that looks promising and is reasonably priced, check to see if you can get a money-back guarantee. This will typically protect you. Also, look around, check online banks if brick and mortar ones keep turning you down. Explore every free option before eventually turning to paid ones.

As a final word of advice, when you’re looking for advertisements, favor specific institutions over list sellers. The reason is that if an institution is advertising to people with bad credit or who have been reported to Chexsystems, it’s probably because at that specific moment, they probably have some kind of product or service that caters to this specific niche. Once they decide not to deal with this segment anymore, they will just stop advertising. A list, on the other hand, would have to be continuously updated to account for companies that enter the segment, as well as those leaving it. We’re not saying that it’s not possible to find a good, legitimate list. What we’re saying is that you’ll probably have better luck with the companies that advertise to you than you will with the list sellers.

Finding A Second Chance Checking Account In Your Local Area