If you’ve been turned down for a bank account, chances are you have a ChexSystems record.
Your ChexSystems file has information about any checking or savings accounts you’ve held that your financial institution has closed because of mishandling. Not paying overdraft or nonsufficient funds fees, for instance, can result in account closure, as can identity theft and fraud.
» MORE: What to know about ChexSystems
Banks use ChexSystems files to screen applicants — and if you have a record, it can be hard to open a new account.
That’s what happened to Steven Hughes, an entrepreneur in Columbia, South Carolina. “When I went off to college, I made every financial mistake possible,” he says, including overdrawing his checking account multiple times and racking up several nonsufficient funds fees.
Hughes’s accounts were soon closed. Information about them was placed in the ChexSystems database, and he says he had trouble opening new bank accounts thereafter.
If you’re having a hard time opening an account because of ChexSystems, follow these five steps to remove your record.
1. Request your report.
Request your records by calling ChexSystems or visiting the “Request Reports” section of its website. You’re eligible for a free copy of your report once every 12 months.
2. Dispute errors.
If you find information that you believe is wrong, gather supporting documents. Then go to the ChexSystems dispute page and choose how you’ll submit your dispute:
- Online: Complete the form on ChexSystems’s website and upload up to five supporting files.
- Via mail or fax: Print out and complete the “request for investigation” form from the ChexSystems site. Submit it with copies, not originals, of any supporting documents.
- By phone: If you’ve already received a copy of your ChexSystems report, you can call a representative. This is helpful if you don’t have any supporting documents. Note that you can’t make disputes involving fraud or identity theft by phone.
ChexSystems generally researches disputes within 30 days and will let you know if a correction is needed. If you’re not satisfied, you can add a brief statement to your report explaining the problem.
3. Pay off debts.
If your report is accurate and you owe money, pay it. Ask your creditors if they’d be willing to settle for less than the debt amount if your budget is tight.
“I was able to negotiate a payoff with one collection agency for a little less than the total amount owed,” Hughes says. Once he paid the agreed-upon amount, he received a receipt for payment and sent it to ChexSystems. “The next report I pulled showed that the debt had been cleared,” he adds.
4. Ask creditors to remove information from ChexSystems.
Once you’ve paid your debts, request that creditors update with ChexSystems. Get payoff information in writing, and keep track of receipts or other documents that show you’ve paid the debt.
5. Wait until the record drops off the database.
If all else fails, wait until blemishes fall off your record. A ChexSystems record is usually removed from your file after five years. Until then, you might be able to open a second chance checking account. These accounts are designed for people with bad credit or banking histories, including ChexSystems reports. They help you rebuild your financial history and work up to a standard bank account, usually within a year. If you’d rather not deal with a bank account right now, choose a prepaid debit card with low fees and the services you need.
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Hughes was able to pay off his debts over time and start fresh with new accounts.
“All my records were eventually cleared,” he says.
This article was updated on June 28, 2016. It was originally published August 31, 2015 .