ChexSystems Explained: How to Overcome Banking Hurdles

Getting denied a bank account without warning can be confusing—and ChexSystems is often the reason. This lesser-known consumer reporting agency tracks your banking activity, and even one mistake like an unpaid fee or closed account can land you on their list.

The good news is, you’re not stuck there forever. In this guide, we’ll break down how ChexSystems works, why it affects your ability to open new accounts, and what you can do to move forward.

Why Banks Use ChexSystems

ChexSystems is a consumer reporting agency that helps banks decide whether to open a checking account for a new customer. They provide information for banks and credit unions much like the credit bureaus: Equifax, Experian, and TransUnion. However, there are some differences in the way they maintain and report data.

ChexSystems does not make any decisions regarding whether a bank account is opened for you. That choice depends solely on the financial institutions you decide to work with, but not all banks use ChexSystems.

As a consumer reporting agency, ChexSystems is governed by the Fair Credit Reporting Act (FCRA) and other laws enforced by the Federal Trade Commission.

This means you have access to your ChexSystems report in much the same manner as you can access the credit reports from the three major credit bureaus. If you’ve had problems opening a bank account, it may be wise for you to order your ChexSystems report to see what’s listed.

See also: Am I in ChexSystems? How to Tell if You Are in ChexSystems

Best Banks That Don’t Use ChexSystems

How ChexSystems Can Affect New Bank Accounts

If your checking account was closed for non-sufficient funds (NSF), excessive overdrafts (OD), fraud, or other reasons, it may be difficult to open another checking or savings account.

In particular, issues arise when your checking account is closed, and you have unpaid fees either for overdraft or other services. Most credit unions and banks will refuse to establish a bank account for individuals who have mismanaged deposit accounts in the past. This is true even if you currently have funds available to open an account.

Financial institutions rely on ChexSystems to provide information about people who have had issues with insufficient funds in the past.

It works much like being denied a credit card due to past credit history. Even if your current situation has improved, you may be denied a bank account based on your past banking history.

Check Out Our Top Picks for 2025:

Non-ChexSystems Banks
&
Second Chance Banks

How ChexSystems Works

ChexSystems keeps track of bank accounts that have been closed for particular issues. More than 90% of banks and credit unions in the U.S. use ChexSystems as part of the application process for a new checking or savings account.

You can see why it can be difficult to successfully apply for checking and savings accounts if you’re in their system. The standard term for this is accounts that were closed “for cause.” The term “for cause” can encompass any number of things, including:

1. Multiple bounced checks in a short amount of time.
2. False information provided on a bank account.
3. Nonpayment of insufficient funds or overdraft.
4. Abuse of a savings account, debit card, or ATM transactions.
5. Any type of fraud.
6. Violation of any banking rules and regulations

This is by no means an exhaustive list. ChexSystems may include your closed account for another reason besides what is listed here. Each time you have a deposit account closed for one of the reasons listed above, ChexSystems keeps track of it in their database.

See also: 7 Reasons for Being Denied a Checking Account

How Long It Takes to Be Removed from ChexSystems

ChexSystems keeps the information on file for up to five years from the date the bank account was closed. This may seem similar to a credit score, but ChexSystems is an entirely different scoring process.

Your ChexSystems Consumer Score ranges between 100 and 899. The higher the score, the better. Interestingly, you can have a poor ChexSystems rating while having an excellent credit score, and vice versa.

They’re completely different measures of your financial history, with the information being used in very different situations.

See also: How Long Do You Stay in ChexSystems?

How Long ChexSystems Stays on Your Record (and What You Can Do About It)

Even if you later pay off the overdraft you owe to the bank or credit union, it will remain on your ChexSystems record if the account was closed with unpaid negative balances.

While ChexSystems will update a paid overdraft, they will not remove the record from their system until after the five-year period. However, they will remove it if there is evidence the bank account was listed improperly. For example, if the account is not yours or was created fraudulently as a result of identity theft.

Most ChexSystems banks won’t open an account for you if you have one or more incidents listed on your ChexSystems report.

If you’re denied a bank account due to your ChexSystems report, you are entitled to a free report within 60 days of being denied. This is no different from being denied credit due to information on your credit report.

Check Out Our Free Guide:

How to Get Out of ChexSystems

How to Get Your Free ChexSystems Report

The best way to get your ChexSystems consumer disclosure report is to order it directly online from the ChexSystems website itself. You can also request a ChexSystems report by mail:

Chex Systems, Inc.
Attn: Consumer Relations
7805 Hudson Road Suite 100
Woodbury, MN 55125

You should receive your ChexSystems report in about five business days. If you find any inaccurate information, you can dispute it in the same way you can dispute credit report inaccuracies. You may also place a statement on your ChexSystems report for any negative information listed.

You can use this statement to explain any circumstances of why an account was closed, such as disputed fees or other issues.

Non-ChexSystems Banks

While most banks do use ChexSystems, it’s possible to find banks that don’t. Some banks don’t screen applicants at all for checking and savings accounts.

However, they may look at ChexSystems reports, so it’s important to understand what’s on there as well. They might also review any records you have in the Early Warning System (EWS) or Telecheck Data.

Here is a list of popular banks and credit unions that DO NOT use ChexSystems.

Second Chance Banking

Some banks and credit unions that use ChexSystems still offer second chance checking accounts to people with a few past banking mistakes. These accounts are designed to give you a fresh start—even if your ChexSystems record isn’t spotless.

Second chance accounts often come with limits, like minimum balance requirements or restrictions on how much you can withdraw. But if you manage the account responsibly, many banks will eventually let you upgrade to a standard checking account.

To boost your chances of getting approved, consider skipping overdraft protection. That way, the bank isn’t on the hook if you overdraw—your card will simply be declined if there’s not enough money in your account.

ChexSystems Banks

Here is a list of popular banks and credit unions that DO use ChexSystems.

Other Ways to Get Approved for a Bank Account With a ChexSystems Record

Getting back into the banking system can feel tricky—but it’s not impossible. These smart moves can improve your chances of opening a new account, even if you’re on ChexSystems.

Use Direct Deposit to Boost Your Approval Odds

If your ChexSystems history is holding you back, direct deposit can work in your favor. Some banks are more likely to approve your account if you set up direct deposit right away—it shows steady income and reduces their risk.

Before applying, ask if enrolling in direct deposit could help you qualify, especially for second chance or non-ChexSystems accounts.

Know the Bank’s Policy Before You Apply

Not every bank checks ChexSystems right away. Some will let you open an account, then run your report afterward—and if they don’t like what they see, they’ll shut it down and send your deposit back by mail.

To avoid the hassle, always ask about ChexSystems policies before applying. A quick call can save you weeks of waiting for a refund.

Consider Prepaid Cards If You Need a Temporary Fix

If you can’t find an account that works for you, there are some other avenues you may be able to explore. For example, some companies offer prepaid debit cards, which allow you to load your funds onto the card and use it to make payments. Essentially, a prepaid debit card works like a checking account without the ability to write checks.

In some instances, they even have online bill pay to allow you to still meet your financial obligations without a checking account. However, it’s important to read the terms and conditions to ensure you aren’t being overcharged for using the card. Some of them can charge up to $1 or more per transaction.

Monitor Your ChexSystems Report Regularly

Don’t wait until you’re denied again—check your ChexSystems report at least once a year. Just like a credit report, it can contain errors or outdated info that could hurt your chances.

Spotting and fixing problems early gives you the best shot at getting approved next time you apply.

Bottom Line

ChexSystems can feel like a dead end, but it’s not permanent. If you’ve had past issues with overdrafts, unpaid fees, or a closed account, you still have options to get back into the banking system.

You can request your report, dispute any errors, or pay off outstanding balances. Some banks even offer second chance accounts or skip ChexSystems entirely.

The key is to take action sooner rather than later. With the right steps—and the right bank—you can leave those banking hurdles behind.