OnPath Credit Union

ChexSystems is a consumer reporting agency that tracks the behavior of banking customers. They do this in partnership with banks and credit unions, who report certain types of account activity to ChexSystems and similar reporting agencies.

ChexSystems doesn’t provide credit scores like Equifax, Experian or TransUnion. They also don’t monitor both good and bad behavior, and their ratings won’t impact the rates you qualify for as a borrower or the fees you’re charged on traditional checking and savings products. All ChexSystems really cares about is account behavior banks consider to be bad. 

The purpose of ChexSystems and similar agencies is to assess the risk individual customers pose to banking institutions. They’re intended to prevent fraud by warning banks and credit unions of applicants or members with a history of fraudulent or bad banking behaviors.

What’s in My ChexSystems Report?

These reports traditionally have three parts:

• Personal information of banking customers, like name, address and Social Security numbers.
  
  
• A record of past inquiries made by banks for the individual’s report. This can indicate whether a person who is suspected of or is found to have committed fraud or other frowned-upon behaviors is persistently trying to open new accounts at different banks.
  
  
• The instances and types of misconduct the customer has committed. This may include both accidental and intentional actions, including overdrafting, bounced checks, unpaid negative balances and attributions of past account closures (like suspected fraud or abuse).

What Are My Rights as a Banking Customer and Consumer?

Although ChexSystems isn’t a credit bureau, it is subject to some of the same rules and regulations. For example, the organization is subject to the Fair Credit Reporting Act (FCRA), which entitles anyone with a banking history to request one free ChexSystems report every 12 months.

Consumers also have the right to (and absolutely should) dispute anything they believe to be inaccurate or out of date in their ChexSystems report. The agency is required to investigate any disputed information and correct inaccuracies (typically within 30 days of consumers reporting them).

It’s also worth noting that banks and credit unions must obtain your consent before they check your ChexSystems report when you apply for membership or attempt to open an account. You can technically refuse to allow them to check your report, but this will usually result in your application being denied.

What Are the Consequences of Having a Negative ChexSystems Report?

The primary way in which a ChexSystems report impacts consumers is their eligibility to access financial services and tools offered by banks and credit unions. This can be a potentially serious issue, as it may force some people to rely on check cashing businesses (which take a significant portion of the check’s value as payment for the service) and pay for goods and services with cash. Relying solely on cash poses a number of security issues.

There are many purchases and fees that are far easier to pay for, like rent, loan payments and utility bills, with a check or debit card. When checks are required, you will likely be forced to use cashier’s checks, which are also cumbersome to acquire and not free.

How Long Do I Have to Wait Before Past Behavior Falls Off My ChexSystems Report?

Instances of “bad” behavior typically stay on a ChexSystems report for five years, which is a long time to go without access to a bank account, debit card or checks. However, you don’t have to wait five years to open a new checking account if you apply for a second chance checking account.

OnPath Federal Credit Union offers a second chance checking account, Rise Checking, to members whose ChexSystems report prevents them from opening a normal checking account elsewhere.

Rise Checking accounts also provide an accelerated path to normalization for OnPath FCU members who enroll. Keeping your account in good standing for at least 12 months may allow you to transition your Rise Checking account into a normal checking account with all the traditional privileges, including check writing.

Opening a Rise Checking account and unlocking additional privileges or transitioning a Rise Checking account to another type of checking account requires management review.

Get Your Banking Privileges Back Faster With the Help of OnPath FCU

As a community-oriented credit union, OnPath FCU maintains a deep commitment to local New Orleans members, workers and their families. We believe people deserve a second chance after mistakes and even past bad behavior. We are committed to providing an accelerated path back to normalization for banking customers who may not have great ChexSystems scores.

Call us at 800.749.6193 to learn more about Rise Checking or other membership perks.