How Long Do You Stay in ChexSystems?

Banking

If you’ve ever applied for a savings or checking account at a new bank and been turned down, ChexSystems was likely to blame. Your ChexSystems report is basically the banking version of your credit score.

Man viewing report

A ChexSystems report contains a record of your activity and account closures at various banks. But in the spite of the agency’s importance, many people have never heard of ChexSystems.

This article will explain what ChexSystems is, what the agency monitors, and how long it takes to get out of ChexSystems.

What is ChexSystems?

ChexSystems is a consumer reporting agency that collects information about problems you’ve had with banking institutions. The agency provides services under the regulations provided by the Fair Credit Reporting Act (FCRA).

ChexSystems tracks your account activities and closures at various banks and credit unions. If you have a history of closing accounts, bouncing checks, and overdrawing your account, this information is included in your ChexSystems report.

And depending on the type of derogatory mark, this information can stay on your report for quite a while. When you apply for an account at a new bank, most banks will use your ChexSystems report to either approve or deny the request.

See also: 15 Banks That Don’t Use ChexSystems in 2020

What information is included in your ChexSystems report?

Under the FCRA, ChexSystems can report negative transactions on your checking and savings account. If you’ve ever overdrawn your account or been sent to collections, this information will show up on your ChexSystems report.

However, the report will also show when your balances are back in good standing. Here are some of the other types of information that will be included in your ChexSystems report:

  • Account closures: Your report contains a record of every account closure. This can become problematic if you have repeated account closures due to bounced checks or suspected fraud.
  • Third-party inquiries: Your ChexSystems report contains a record of everytime your account is viewed by a third-party. This typically happens when you try to open a new checking account or credit card.
  • Bounced checks: If you’ve ever written a check that bounced due to insufficient funds in your account, this will be included in your ChexSystems report. However, this only becomes a problem if you have a history of bouncing checks.
  • Suspected fraud: If you’ve ever altered checks or provided incorrect information on a banking application, this will be noted in your report. This could also include depositing empty envelopes into a bank ATM.
  • Public records: Certain negative public records are also included in your ChexSystems report. This includes things like liens, bankruptcies, and evictions. Bankruptcies are particularly damaging, and can stay on your report for up to 10 years.
  • Overdrafts: If you’ve ever overdrawn your checking account, that information is included on your ChexSystems report. However, a couple of overdrafts are unlikely to hurt you. This becomes problematic if you have a history of overdrawing your account and then failing to get your account to good standing.
  • Opening an excessive number of accounts: If you try to open multiple accounts within a short period of time, you may be flagged for potential fraud on your ChexSystems report.

How long does it take to get out of ChexSystems?

According to ChexSystems, reported information typically remains on your report for up to five years. But just like you have the right to dispute inaccurate information on your credit report, you can dispute inaccurate information on your ChexSystems report as well.

If you’ve never looked at your ChexSystems report before, you can contact the agency and request a copy of your consumer file. From there, you can dispute any inaccurate information.

ChexSystems will then conduct an investigation which should be completed within 30 days of your request. The agency will notify you of the results by mail.

Bottom Line

Your ChexSystems Report is a record of your banking information, and banks use this report to either approve or deny new account requests. If you’ve ever applied for an account with a bank or credit union and were turned down, it’s likely because of negative items on your ChexSystems report.

The best way to maintain a good report and avoid any problems is by keeping all of your accounts in good standing. But mistakes do happen, and you have the right to request one free copy of your ChexSystems report once a year. From there, you can contact the agency to dispute any inaccurate items you find.

Jamie Johnson
Meet the author

Jamie Johnson is a freelance writer who has been featured in publications like InvestorPlace and GOBankingRates. She writes about a variety of personal finance topics including student loans, credit cards, investing, building credit, and more.