If you’ve never heard of ChexSystems, that’s probably a good thing. The consumer reporting company collects data on misused checking and savings accounts, and many banks check it before granting new ones.
If you don’t tend to overdraw accounts or skip out on bank fees, your ChexSystems file is probably pretty thin, and you’ll likely have no trouble opening a new account if you want to.
To help ensure identity thieves can’t take advantage of your good record and open an account in your name, you can freeze your consumer report from ChexSystems. Thanks to high-profile data breaches over the past few years, you may already have frozen your credit reports with the three major credit bureaus: TransUnion, Equifax and Experian.
“Adding a [ChexSystems] freeze will provide another layer of protection,” says Roslyn Lash, an accredited financial counselor in Winston-Salem, North Carolina.
Feeling freeze fatigue? Don’t worry: The process is quick and free.
“If a thief opens an account, they’ll misuse the account by overdrafting and accruing fees,” Lash says. This could result in your getting blacklisted, preventing you from opening legitimate new accounts, Lash says.
Freezing your ChexSystems report largely prohibits ChexSystems from releasing information about you without your consent. Many banks won’t open an account if they can’t read up on your banking history to ensure you’re a good risk, so a freeze makes it more difficult for an identity thief to open a checking or savings account in your name.
It’s important to note that if you do have a negative account history, ChexSystems can still release that information if you try to open a checking account, even with a freeze in place.
It’s not a great idea to freeze your ChexSystems report if you’re considering switching banks; you’ll want the new bank to have access to it. But if you have a clean record and you’re happy where you are, a freeze offers some protection against identity theft.
Unlike many credit freezes, ChexSystems report freezes are free, and requesting one takes just a few minutes on the company’s webpage (provided you’re 18 or older). You’ll enter a handful of personal details — including your name, address, Social Security number and driver’s license number — and then you’ll receive an identification number through the mail. You’ll need that number to make future changes to the freeze, such as lifting it if you want to open a new account at a different bank.
Frozen? Stay vigilant
Not all banks use ChexSystems, so a freeze won’t eliminate your risk — but it will help. And it’s not the only additional freeze you should consider. Lash also recommends clients freeze their files at Innovis, a company that collects and reports credit information similar to Experian, Equifax and TransUnion. Doing so is free. You can request a copy of your reports from both Innovis and ChexSystems every year to make sure they’re accurate.
Freezing your files doesn’t mean you can forget about identity security — especially if, like many people, your data has already been compromised. Nathaniel Wood, associate director of the Federal Trade Commission’s Division of Consumer and Business Education, suggests continuing to monitor your credit on AnnualCreditReport.com, and “anyone who thinks they might be a victim of identity theft should go to IdentityTheft.gov. They can get a free, customized report on how to recover,” he says.