So if you are one of the unlucky ones whose tried to open a bank account only to be told that it’s impossible, welcome to the club of those banned from banking by ChexSystems. I’ve created this resource page for all those struggling to get a bank account, but can’t. Frankly, I’m tired of seeing so many baloney articles about this topic that just leave people floundering around for real information.
Let’s cut to the chase for the impatient. If you want the quickest solution, I suggest you look at opening a Second Chance Checking Account. I’m not by any means saying this is the best solution (the best solution is to actually get a regular bank account), but it’s the quick and dirty solution for the lazy. For the 95% of the people who don’t want a battle, it’s the most convenient solution. But folks, it’s not the only solution.
So if you want to read a three thousand word post on what your other options are, grab a cup of coffee and sit down because here we go…
How to Open a Bank Account without ChexSystems
Now the question you probably want to know is “how to open a bank account without chexsystems.” The answer is a rather long one. The dirty truth is that if you have your name added to the ChexSystems database, you are going to have to prepare to battle for your bank account. Did I say “battle?” Yes, battle. The choice comes down to this:
- Spend a lot of time looking around for alternative banking solutions
- Fight with your bank and ChexSystems,
- Wait five years.
Anyone else that tells you there is some magical solution to getting a no chexsystems bank account is flat out lying. I’ve seen a lot of sites out there that try and scam people into some solution that does not exist.
First, let’s look at some of the main ways how you can end up getting your name into ChexSystems:
- You’ve committed some type of banking fraud in the past
- You consistently write bad checks
- You’ve had bank accounts closed down or suspended
- You fail to make payments on money you owe the bank
These are only four of the most common ways people get their name added to the ChexSystems records. In short, if you have poor financial management skills, it’s pretty darn easy to get your name listed in ChexSystems.I’m sure we can come up with a couple dozen more ways. Here is one scary example: I had one girl email me and tell me she cashed a check from her grandfather. Both her bank and her grandfather’s bank’s tellers called each other and verified it was a legit check. However, a week after she cashed it, she was told the check bounced. She had already used the money and could not instantly repay the bank; the bank then closed down her bank account and her name was added to ChexSystems because of suspected fraud. So it’s very possible to end up on ChexSystems’ records, even if you may not be at fault — especially if you are dealing with checks.
How to Get Bank Account with Bad Credit
As stated, here are the main ways you can get a bank account if your name is in ChexSystems
1. Get an Online Bank Account
Many online bank accounts are not affiliated with ChexSystems. There are quite a few reputable bank accounts out there and more than a few don’t require a ChexSystems check. You can sign up for a legit online bank account here that’s guaranteed not to use ChexSystems or you can do a general web search online. Short of actually getting a normal bank account, this is the best solution I’ve yet found online. Just make sure you are getting a legit bank account as there are a lot of scams out there. The link I gave goes to a legit site, but if you do a general web search, be very careful that you don’t land up in trouble — I’ve seen a ton of scams out there regarding this topic.
2. Look at Prepaid Visa Bank Cards
Another popular option for people who can’t open bank accounts. Prepaid visa bank cards are basically credit cards linked to an online account. You “top” up the card and can use it like a credit/bank card. When you need more funds on the card, you simply make a payment on the card just like you would make a payment to a credit card. The difference between a prepaid visa card and a regular visa credit card is that you can add up a negative balance on your credit card while with a prepaid visa, you can only spend what you have deposited on the card. This card does do a pretty good job at replacing your bank. I know because I had one of these a couple years ago. The cons are that you can’t do some of the things you normally do with a bank account like write checks, transfer money between accounts, etc. But for just buying things and depositing money on the account/card, it’s fine.
3. Find a Non ChexSystems Bank
Another option you could consider is to simply find a bank that doesn’t use ChexSystems. Now, as I’ve stated, one option is to look at an online bank account – many, many of these are not partnered with ChexSystems meaning it’s a good way to get a bank account with bad credit (bad banking credit that is).
If you want to find a PHYSICAL bank, it’s also possible. But you are going to have to put some arm work into this. You see, physical banks that don’t use ChexSystems don’t put this information online. To find out if they don’t do a ChexSystems credit check, you are going to have to call them up. I’ll tell you right now that most major bank chains use ChexSystems, so forget places like Bank of America or CitiBank and such. They are all partnered with ChexSystems or Telecheck. That means you are going to have to look at smaller “neighborhood” banks or credit unions. These might not utilize ChexSystems. The only way to tell is to get a list of banks in your area and call them directly.
Now, it may be that you can open a bank account with a major bank even if your name is in ChexSystems, but instead of a ChexSystems check, they may do a regular credit check. If you happen to have decent credit history, then you might be ok for the account. Again, this may vary between banking institutions and there are no guarantees. You’ll have to call and directly ask.
Now there are supposed Non ChexSystems Bank lists floating around on the web you can look at. But don’t pay any money for these certainly. I’ve had a good look at some of them and most of them contain outdated information or some scammer trying to see you a bunk list for anywhere from 20 bucks to a couple hundred!
4. Wait 5 years
Your name will be dropped from the ChexSystems list after 5 years. I offer this as a possible solution since it is. However, most people can’t go without a bank account of some kind for that long. But if you don’t mind waiting years, well, it’s a solution for you.
5. Fight ChexSystems
Yes, you can fight ChexSystems (and your bank/ex bank) and force them to remove your negative information from ChexSystems records. Keep in mind that this will likely take a few months and will involve sending out multiple letters to ChexSystems via certified mail and to the financial institutions that send your name to ChexSystems in the first place, and possible court appearances. If you are persistent, you can fight ChexSystems and force your name of their record with certainty. But it takes work on your part. If you can’t commit to battling it out for 3 to 6 months, look for a bank that doesn’t use ChexSystems, open up an second chance account, or figure out some other option. If you want to fight, read the final section of this article for a comprehensive ChexSystems Removal guide.
How to Avoid Getting Your Name in ChexSystems
The best defense is sometimes a good offense. In the case of your banking, this means it’s important that you watch your financial management and keep on top of your banking to ensure you don’t have any problems. Here are 9 common ways you might get your name added to ChexSystems
Banking Mistake 1
You forget to stop any automatic payments after you close down your account
How to Avoid This
Make sure you look at all automated payments you have on your account and cancel them before you close a bank account
Banking Mistake 2
You decide to cancel your bank account by letting the balance drop down to zero (or below)
How to Avoid This
If you close down your account by letting it drop to zero and then ignoring, banking fees may accumulate. The bank will dip into your zero account, putting it at a negative balance which may accumulate overdraft fees. These fees may continue to add up. You then “owe” the bank money. Simply leave this bank account long enough, and you may find your account suspended and your name on ChexSystems “bad list.”
Banking Mistake 3
You deposit a check, then write a check the next day. Only you don’t have enough funds to cover the transaction; your account dips into overdraft.
How to Avoid This
Though you might deposit a check, this doesn’t mean you actually “have” the funds. It often takes anywhere from 3 to 5 business days for a check to clear. If you then withdraw money or write a check, your account will dip into overdraft.
Banking Mistake 4
You write a check for more than you have in your account.
How to Avoid This
Your check with either “bounce” possibly causing you a NSF fee or will clear but dip into your overdraft, charging you interest. To avoid this, keep track of your account balance at all times. If you have written a check that totals more than the amount in your account, put money into your account immediately to ensure the check clears.
Banking Mistake 5
You change names or move
How to Avoid This
If you move or change names, you may not be getting your financial statements. Just because you don’t know the status of your account doesn’t mean you won’t be held responsible for it. Make sure you inform your financial institution of any changes to your name or address asap.
Banking Mistake 6
You write a Post Dated Check that’s cashed too early
How to Avoid This
There is no legal obligation for the other party not to cash the check. The check may be cashed and if so, you are responsible. So try to avoid post dating checks unless you have the money in your account
Banking Mistake 7
You lose your checks or they get stolen
How to Avoid This
Should any checks get stolen, you must report it immediately. If someone tries to cash false checks in your name, you will be in a much better position to counter this kind of check fraud.
Banking Mistake 8
Your bank makes an error
How to Avoid This
You want to look over all your financial statements to ensure there is no mistakes. It can cause a lot of problems should the financial institution make some mistake that effects your credit. If you notice any in accuracies, notify them as soon as possible.
How to Get Out of ChexSystems
ChexSystems is a large association of financial institutions that are all networked together to provide a database of “unwanted customers.” To ensure these backlisted customers don’t get a bank account, these financial institutions report on any customer who demonstrates poor financial management skills, be that failing to repay bank loans, writing bad checks, etc. One way to guarantee your name gets added to this banking “blacklist” is to have your checking account closed down by your bank. If this occurs, you can be certain your name will be added to this list. Once a person find themselves on this list, it’s very very difficult to open a bank account with any financial institution connected to the ChexSystems network for at least five years (at which time, your name will be dropped).
So how can you get out of ChexSystems? Bear in mind, this is a LONG and arduous process. If find MOST people don’t want to go through the effort, but it is certainly possible to get your name dropped from the list if you are willing to fight hard enough. Because of the paperwork involved and legally obligated by law against both your (ex) bank and ChexSystems, you have a pretty good chance of getting your name removed.
Keep in mind that if you are not prepared to fight it out, don’t waste your time and just go with one of the established, easier solutions.
Step 1:
Head over to the OFFICIAL ChexSystems website and request your free copy of the ChexSystems report. This is free. If you find any website out there trying to sell you this report, it’s a flat out SCAM. ChexSystems, by law, is required to send you your report if requested.
Step 2:
Once you receive the report, use the template below (edit it for your personal details), then mail it to the given ChexSystems address. It’s important that you send the letter through CERTIFIED MAIL. You also want to have a return receipt requested. This will leave no doubt that the letter has been received by ChexSystems. Why is this really important? Since ChexSystems functions as a sort of “credit agency” they are by law legally entitled to verify any disputed information within 30 business days, just like credit agencies like Equifax. If they do not comply with this, they must, by law, remove that information from their database.
You will also send off the Bank Dispute Letter at the same time you send the (first) ChexSystems Dispute Letter.
Note Regarding Letters: I’ve given you a rough template. Feel free to edit the letters as you see fit.
ChexSytems Dispute Letter
—————————————-
[Your Name]
[Your Address]ChexSystems Consumer Relations
7805 Hudson Road
Suite 100
Woodbury, MN 55125[Date]
[To Collections and Consumer Relations Dept.:]
I have been notified that (bank name) has submitted to records ChexSystems maintains under my SSN negative information. I see an entry listed from (bank name) regarding a (transaction information listed on ChexSystems report).
I know nothing about this transaction with (name of bank). Please submit verifiable proof of this transaction along with any documentation associated with this transaction that bear my legal signature.
If no such information can be provided, please remove any negative information filed with my SSN under the records you maintain.
[Contact Information]
—————————————-
Step 4:
If ChexSystems sends you a letter within the 30 day period, send the template below. Modify the personal details as you see fit, but keep the general form the same.
ChexSystems Dispute Letter 2: Send if ChexSystems sends you “verified information”
—————————————-
[Your Name]
[Your Address]ChexSystems Consumer Relations
7805 Hudson Road
Suite 100
Woodbury, MN 55125[Date]
[To Collections and Consumer Relations Dept.:]
SUBJECT: Dispute of ChexSystems Report
I am sending you this letter that the following financial institution (put in your bank name here) has confirmed that I have a current unpaid debt. However, despite my official request for evidence from ChexSystems of this debt, I have received nothing.
I am therefore again requesting the evidence be mailed to me within 20 business days. I’m also requesting the following information of each person at (bank name) that was contacted regarded my account:
- Name
- Address
- Telephone Number
Furthermore, I would like to be sent official documents that state I am in a legally binding agreement to pay this debt back.
If you do not comply with this request, note that you are breaking the federal code regulating credit reporting agencies (see Federal Trade Comission 15 USC 41). Keep in mind that all communications between both parties will be kept for evidence, should this dispute be taken to a court of law.
Please also note that I will be filing a complaint with the FTC should you fail to comply with my request for evidence, as failure to do so is in direct violation with the federal laws that guide credit reporting agencies.
OPTION 2: CHEXSYTEMS DOES NOT SEND YOU ANY RESPONSE TO FIRST LETTER
ChexSystems NO Reply DisputeLetter
—————————————-
This letter is to inform you that you have not sent any information or proof as to why my name has been added to ChexSystems. As you have not replied within the legally binding 30 day period that guides all federally sanctioned credit agencies, I must presume no such proof is forthcoming or exists.
Please not that you have 30 days from the date of this letter to reply. Any failure on your part to respond will be interpreted as a waiver to all claims on your part. I will expect my name, social security number, and other information added to the ChexSystems records to be in error and consider this matter finished.
I have been sending letters in good faith and it is simply unacceptable on your part not to respond for my legally entitled requests for proof in the matter of this claims being leveled against me. Either provide me with valid, legally binding proof, or remove all information associated with me from your list. By not replying to my last letter, you are in fact violating the Fair Credit Reporting Act and you are liable in court.
Failure to reply within 30 days will result in maximum damages in small claims court regarding identity fraud, defamation, and violation of the Fair Credit Reporting Act. Be assure I will process this claim to the full extent of the law.
You can contact me here
[Your contact information ]
—————————————-
Letter to Bank : Send dispute letter to bank, followed by first dispute letter to chexsystems
—————————————-
[Banking Address]
Subject: Dispute Regarding [dispute details]
This letter is to inform (name of bank) that info (account number) claim (give your claim here) is officially disputed.
Please send me documentation with my signature stating that I legally obligated to pay this claim. Any negative marks made on my credit report (of which ChexSystems is included) for a debt that I don’t owe is a direct violation of the Fair Credit Reporting Act. If you cannot supply evidence that this debt is owed, all negative credit information submitted against my account must be removed.
If you do not supply this evidence within 30 days, legal action against (name of bank) will be taken for violation of the Fair Credit Reporting Act.
[Contact Information]
—————————————-
Step 5:
At this point, you will have either received a letter with “verified proof” from ChexSystems and sent ChexSystems Dispute Letter 2 or you won’t have received anything and send Dispute Letter 3. The key here is that you are getting all the parties to harass each other for information. One of the parties won’t send out the legally required information and you can get your name off the list.
Even if your bank does provide you with indisputable evidence that you owe them money, you failed to pay some debt, or whatever, they are overwhelmed with existing complaints, etc and won’t submit the verified information. You see, banks are required by law to submit to ChexSystems that you have disputed the information submitted from this bank to ChexSystems. But banks never do this due to the sheer volume of other things they are dealing with this. Since they won’t submit this information, they are breaking the law and you have your loophole out.
Yes, it’s confusing so here is another overview of what’s going on. Submit your Bank Dispute Letter via certified mail and as SOON as you find out they’ve received the letter (and you will know because it’s certified mail), you request your ChexSystems report. Look at the report for the notation stating the report/debt has been disputed. If you don’t see the dispute listed, you’ve got them (your bank, not ChexSystems) violating the Fair Credit Reporting Act, Section 623. Since they are in violation, they have to remove records of that debt.
Yes this sounds a bit shady but it’s all perfectly legal. Banks are required to submit this information in a timely fashion, but rely on the fact that 99% of consumers won’t go to this type of effort. Banks simply cannot keep up with such federal deadlines for these type of reports and filings.
So after you get that ChexSystems report and notice the bank has NOT added the note that you have filed the dispute, send out a letter to your bank notifying them of your intent to sue within 30 days unless all records of said bank debt are deleted and your entry removed from ChexSystems.
And here is where it’s win win for you. If the bank hums and haws about the debt and don’t remove the debt and your name from ChexSystems or the bank simply does not reply, go to small claims court. It’s cheap (less than 50 bucks) and in almost every instance that I’ve heard about, after they are served the court date, they’ll settle over phone rather than waste time and money going to court over a few bucks. And lo and behold, if the bank actually does show up in small claims court, you’ll absolutely win since they violated the Fair Credit Reporting Act. I’m not just making this up – my ex girlfriend ended up doing just what I told you here and went to court and won the same way. I’ve also verified this with other people who have done the same and there are some other websites online where a couple other people talk about the same thing. All in all, it works!
As a last resort, if all the other methods don’t meet with success for some reason, take ChexSystems to small claims court directly. I can promise you, big company or not, they don’t want to waste time in small claims court against you. They will settle on the phone, removing your name from the system. In some cases, you may even get a small cash settlement out of them. I have NOT done this myself nor did my ex girlfriend, but I’ve seen this advice given out on the web and I’ve verified it directly with a few people online who have done so.
Conclusion
Even if you have committed some banking mistakes in the past, you shouldn’t have to suffer years of not being able to open a checking account because of ChexSystems. As discussed in this article, there are multiple solutions out there for you to pursue, from opening up an online bank account, to using a prepaid visa card, to finding a non chexsystems bank, to even fighting ChexSystems. The key to getting a bank account without ChexSystems interfering is to be persistent. Whatever you do, DON’T GIVE UP, plenty of people open bank accounts without worrying about having their name in ChexSystems. You can too.
