Opening a checking account with bad credit does not mean you will have difficulty getting approved if you failed to pay an emergency room bill or have been late with your credit card payments. Your credit bureau history is seldom checked. Banks rely on agencies that report on banking history instead. The two largest such agencies are ChexSystems and TeleCheck. If your last checking account was fraught with overdrafts or if the bank chose to close the account, you can assume that it was reported to one or both of these services. When you apply for a new account, the bank will obtain the report; while each bank has its own policy regarding approval, few will open a new checking account if there is a consistent history of problems. However, some banks offer what they call second chance banking, and if your report shows only one bad account, they will often approve opening a checking account.
From the category archives:
ChexSystems
Bad credit, when the term is used to refer to bank accounts, has little to do with your credit score and everything to do with how you have handled bank accounts in the past. While bounced checks and closed accounts can appear on your credit history, banks seldom check that information when deciding whether to open an account. Instead, the majority of them request a report from an agency that reports on bank related incidents. The two most commonly used are TeleCheck and ChexSystems. If you want to check your status, you can request reports from either or both, and you are allowed one report per year from each agency. Negative reports from these agencies usually mean that you need to know how to open a bank account with bad credit.
Should we be flattered… or concerned that they don’t get it? We were reviewing some of the presentations from the 2009 Payments Conference held by the Kansas City Federal Reserve, and saw a slide that mentioned StopChex.com.
Yesterday, the Board of Governors of the Federal Reserve announced a set of rules designed to prevent financial institutions from charging consumers fees for paying overdrafts on automated teller machine (ATM) and one-time debit card transactions, unless a consumer consents, or opts in, to the overdraft service for those types of transactions.
Apparently, the great State of Missouri is the defendant in a lawsuit involving our favorite (that’s sarcastic) credit reporting agency — ChexSystems. Yep, Missouri faces damages of to $250 Million (or more) if a recent class action suit is successful.
Since there isn’t much public information about ChexSystems and the number of people on the ChexSystems list, we need to look to other sources to identify trends associated with ChexSystems. Find out why we think the number of people on ChexSystems is rising…
There’s a great article over at the Consumerist blog that reveals how Bank of America uses ChexSystems. The article follows the story of a young person who has had problems opening an account at Bank of America.
A study just released by the FDIC claims that “one-quarter of banks offer ’second chance’ accounts designed for individuals not qualified for conventional bank accounts.” What? Where are these “one-quarter” of banks at? Have you tried to find a good second chance bank account lately?
If you are a loyal reader of this site, you know we recommend that EVERYONE get a copy of their ChexSystems report. You need to know what is on your ChexSystems record, and the only way to find out is to order a copy of your official ChexSystems report. (We provide information on how to contact ChexSystems here).
We get asked this question all the time: “Who is ChexSystems, Inc.”?
Here’s the answer (at least as of the Spring of 2009 … as the ownership changes from time to time!).