ChexSystems is an entity that compiles and maintains a list of bad banking clients. ChexSystems is given lists of bad banking clients by every bank or financial institution partnered with them. And these days, that means most of the financial institutions (read banks) out there. In short, if you have your name on the ChexSystems list, you won’t be able to open a checking account or savings account with any financial institution partnered with ChexSystems.

If you are the impatient type and want the quick solution, click here to open a second chance account for people on ChexSystems. If you want to pursue the other, longer, solutions, read on.

How Do I Get My Name On ChexSystems

It’s actually pretty easy to get added to ChexSystems, especially if you have or have had problems with checks. Here are some of the more common reasons:

• Bank Fraud
• Repeatedly cashing bad checks
• Not paying your overdraft fees
• Defaulting on bank loan payments
• Having the Bank close or suspend your checking/savings account

You need to be especially aware when you deal with checks. It’s very easy to have your information forwarded to ChexSystems because of bad checks. Now not everyone cashes bad checks on a regular basis, but it’s actually easy to make a mistake here. For example, you may miscalculate your account balance (or forget you have a check in process and withdraw too much money from your account) when you write a check; later, when the check goes through, you might not have enough to cover the balance. Another situation that sometimes occurs is cashing a check someone gives you, spending the money, only to find out 5 to 10 business days later the check bounced with you liable to repay the money. If you can’t repay it, you’ll end up on chexsystems.

How to Avoid ChexSystems

If you want to avoid getting your name on ChexSystems, here are a few key tips to keep in mind.

• Know Your Account Balance
• Wait till Check Clears Before Spending
• Maintain Positive Account Balance
• Avoid Abandoning Bank Accounts
• Read Monthly Account Statements

Many people find themselves in trouble with ChexSystems because of the way checks are handled by banks. Let’s try and clear this up a bit. When you cash a check, the bank (usually) gives you the amount immediately ,either in cash or deposited to your account. However, just because you “have” the money, does not mean the check has actually cleared. There is anywhere from 1 to 7 business days involved before your bank actually receives the money from the bank the check was signed from. In the case of international checks (such as cashing a US check in Canada), it can take up to two weeks to clear a check. Many people cash a check an assume they have the money. This can lead to some serious problems since you are completely liable for check that does not clear. It’s a good policy to wait until the check clears until you use the money. I know of several specific examples where a person cashed a check given to them for the sale of an item, received the money then used it only to find out the check did not clear. The person was unable to repay the money and the their information was forwarded to ChexSystems and their bank account closed by their bank.

How to Get Around ChexSystems

Now that you are aware of how to avoid chexsystems, what can you actually do if you have your name added to the ChexSystems list? The good news is that all is not lost. There are some legitimate things you can do to get around ChexSystems.

1. Find a bank that does not use chexsystems
2. Open a checking account for bad credit (internet bank account)
3. Use some type of prepaid debt card option
4. Directly challenge ChexSystems to have your name removed from their records
5. Wait it out for 5 years

Let’s look at each of these

Find a Non ChexSystems Bank

The best solution I recommend is to find a non chexsystems bank. Now I wish it was as easy as that statement sounds, but it’s not. The problem you’ll soon find if you look for a banks that do not use chexsystems is that most of the banks are partnered with ChexSystems – or at least most of the major banking institutions which tend to be the banks you commonly see all around you. But it is possible to find non chexsystems banks.  You can:

1. Find a non chexsystems bank list on the web
2. Create your own non chexsystems bank list
3. Approach banks that use chexsystems to see if a credit check can be used instead of a ChexSystems check

If you can find a valid non chexsystems bank list on the web, it might be a good place to start. For people looking for a non chexsystems bank list, you might doing a google search for a current list. To be honest, I don’t want to give any specific recommendations since the list changes so much from month to month. When you view people’s recommendations, take them with a grain of salt — I’ve noticed some of the websites actually trying to SELL lists, which I think is nothing but a scam. So be careful.

For better success, I suggest you find a list of the local banks in your area either through yellow pages or an online local directory and call each of those banks up, asking if they use ChexSystems. You will have to call them up physically as pretty much no bank will publish whether or not they do ChexSystems checks on their websites.

It’s also possible that some of the major banks will use a credit check instead of ChexSystems to screen bank account applicants. If you have bad credit, you are probably out of luck here though.

How to Open a Second Chance Account

Another option is to look at getting an internet bank account. One such recommended account is the Second Chance Account. This is just a fancy name that refers to a type of online bank account created just for people in ChexSystems. It’s basically a guaranteed checking account. You can find  these accounts online. Now there are both Pro’s and Con’s to this choice.

Pros

1. You get a bank account
2. Second Chance Accounts give you all banking transactions you are used to: cashing checks, depositing money, withdrawing money, and you even get a bank card
3. You can bank anywhere (use internet)
4. You are given/sent a physical bank card

Cons

1. Banking fees tend to be higher
2. Not a physical bank

All in all, if you can’t find a non chexsystems bank, then I recommend you do get a second chance bank account as the next best option. It’s certainly the easiest option.

Prepaid Debit/Credit Cards

This is another option that I’ve seen thrown around as a solution. And it is a solution, though you will need to think about whether you want to use one. In essence, these are basically short term solutions. If you need to do any sort of online purchase, but lack a bank account and/or credit card, prepaid credit cards are a good temporary substitute. The way the work is you deposit money on the card; that amount becomes the balance of the card. When the amount is used up, you need to put more money on the card. Note, these are not regular visa or mastercards. You can use them at places that accept major credit cards, but you can’t put a negative balance on them, like you can with a real credit card.

I recommend these cards if you NEED to make online purchases. You can often link them up to your paypal account or directly use them as a safe visa/master card for online purchases.

Of course, you could use these cards like a replacement bank account, but it depends on your habits.

Dispute ChexSystems

This is another option. Now, before you get all excited, let’s lay it all out. Yes, you can challenge ChexSystems to remove your name from their records, but this will involve challenging both your bank and ChexSystems.

Keep in mind I’m not a lawyer so use this information as intended: a rule of thumb guide. I know several people who have fought ChexSystems using this method, but I cannot guarantee it will work for you. But if you look around online, you’ll find people who aggressively pursue ChexSystems usually do end up winning.

The process is actually a bit confusing and involves getting a (free) copy of your chexsystems report from ChexSystems, writing letters to ChexSystems disputing the transaction (which will be listed on your chexsystems report) that got your name added to the list, then sending a letter to the bank this transaction took place at, disputing the authenticity of the transaction.

Sound confusing? It actually is. The whole idea is basically to get the bank to “break” the Fair Credit Act, which is a federal law that governs how credit reporting agencies like ChexSystems operate. Once you give notice of disputes, financial institutions must respond within 30 days. If one of the institutions miss the deadlines, they are breaking the Fair Credit Act and your name must legally be removed. You may find this book VERY helpful if you want to actually fight ChexSystems.

The exact steps on how to get rid of chexsystems won’t be covered in this article, but for more information, I suggest you look at this article about chexsystems removal for the exact steps or for more comprehensive steps, look at the book I recommended.

Wait 5 Years

For most of you, this is really not an option, but if you can live without a bank account for five years, then ChexSystems will, as stipulated by the federal credit regulations, drop your name from their records. You can get a second chance bank account and use this online account for five years or so until you can qualify for a regular checking account.

A Final Note

You may find that by opening an online bank account and using it for a year or so, you may be able to open a regular bank account after starting an internet bank account. You might be able to use such an account as “reference” or proof that you are a good banking client.

Also note that if you can’t open a bank account because of ChexSystems, you might still be able to open a checking account through a credit check – it’s worth asking your bank.

And finally, don’t let ChexSystems stop you from opening a bank account. It’s true that if you have your name in ChexSystems or Telecheck, it’s harder to open an account, but as this article as shown you, there are some concrete solutions you can pursue.

Now it’s a bit of a misnomer that bad credit will prevent you from opening a bank account. Bad credit history should not affect your ability to open a bank account, though it will certainly block you from having access to some bank account options like overdraft, personal line of credit, etc.

Rather, bad credit, in reference to a bank account refers to someone who has a bad “banking” credit score with ChexSystems. ChexSystems is a credit agency that assigns a credits score to people with banking history. ChexSystems is sort of like the Equifax of the banking world.

If you have a bad ChexSystems credit score, most major banks will reject you. You can get a bad ChexSystems score by repeatedly writing bad checks, committing account fraud, or defaulting on bank payments (mortgages, loans, overdraft etc). It’s quite common for someone with bad credit history to be more likely to default on bank payments or repeatedly write bad checks, so bad credit history can indirectly lead to a bad  ChexSystems score (through the person’s own actions).

If you have a bad ChexSystems score, you will find it almost impossible to open a checking account. A checking account with bad credit can still be opened however, but you will have to seek out other options. One of the best ways to open a bank account with bad credit is to open a Second Chance Bank Account.

A second chance checking account is basically a bank account that does not implement the ChexSystems credit check. You can open a bank account without your previous banking history mattering. Believe it or not, over 50% who are reported to ChexSystems end up opening a second chance banking account.

Now, a second chance bank account gives you most of the features of a regular bank account. You get a debit account connected to a bank account and you have all the traditional benefits of a regular bank account such as a bank routing number, an account number, and a debit card. Many second bank accounts are initially checkless though but will add checking to your account provided you keep your account in good standing. However, some institutions will offer you checking right away – this depends on the bank.

Second chance banking is one of the best ways for people with poor bank credit to have access to all the regular banking features – so if your name has been added to ChexSystems or Telecheck, you will want to take a serious look at a Second Chance Bank Account.

The best place to open a second chance bank account is online. There are a variety of second chance online bank account companies that are eager to offer you a Non-ChexSystems bank account. It’s simply a matter of looking online for a suitable second chance bank account that meets your criteria. Keep in mind that you should check out different bad credit bank account offers and compare – you may find some companies offering second chance bank accounts that include extra features like checks, lower interest. It’s well worth exploring the different offers to get the best deal.

If you have had a troubled banking past, you will find that all other banks seem to know this. When you try to open a bank account – regardless which bank company and where – you will be routinely rejected. This is because your information has been submitted to ChexSystems which is sort of like the main banking credit agency for the banking world. Your name stays on ChexSystems for 5 years, so it’s not feasible to most people to just hope the problem goes away.

But you don’t have to be prevented from opening a bank account. With second chance checking, you can have access to all the functionality of a regular bank account, even if you have bad banking credit.

So what is a second chance checking account? Second chance checking accounts are basically specially bank accounts offered by some banks (usually online) that don’t perform ChexSystems credit checks on their clients. This means that you can open a new bank account with worrying about the bank taking a look at your banking records. Like the name implies, second chance checking is a second chance for people to get a bank account.

More and more online banks offer second chance checking. It’s really just a matter of looking around to find the right bank that suites you. So to find a checking account for people with bad credit, you can start your search online.

It’s important that you check out exactly what’s being offered in terms of a second chance checking account options when explored different checking accounts for bad credit offers you spot online. You should do some serious comparison shopping to secure the best deal you can find. The more searching around you do and offers you check out, the better a position you will be in to get the best deal. Keep in mind that second chance checking will cost you more than a regular bank account – this is the price you have to pay for having such an account. But you can reduce this extra overhead somewhat by doing comparison shopping on all the second chance bank account offers.

The banking world is a small one. If you have mismanaged your bank account at one bank and then seek to open a new bank account with another bank, your application will be rejected. The reason is the new ChexSystems credit checking system that the banking world follows.

If you have bad credit and want to open an account, a ChexSystems check is done on your name. If you show up, the bank will reject your application to open a new bank account. The reason is simple – if you show up for a ChexSystems search, you are a liability to a bank.

Now, this is not exactly fair. A bank can send your information to ChexSystems for a variety of reasons, from serious one like bank fraud, to just writing bad checks on a consistent basis. With the economy in turmoil, it makes sense many people have financial difficulty making bank payments or writing bad checks. This is no surprise. But if you do this, you are punished with the inability to open a new bank account for 5 years (the time your name stays in the ChexSystems computer).

So if you want a bad credit bank account, what do you do. This is where second chance banking comes into. If you can find a second chance bank, you will be able to open a bank account. Second chance banking accounts do not require a ChexSystems credit check. This means you can open a bad credit bank account without fear of being rejected.

If you currently don’t have “bad bank credit”, you don’t know how frustrating it can be for someone not to be able to open a bank account. These days, a bank account is not an option, it’s a necessity. If you want to have access to all the regular financial options that most people enjoy, you are going to need a bank account.

A bank account for people with bad credit will allow you to do just this. Now the best way to open bank accounts with bad credit are to look online for one. There are many second chance banks that offer second chance checking accounts to those who need one. So to open a bank account with bad credit, it’s simply just a matter of finding the right one and applying for it. Getting a bank account with bad credit is pretty easy, since all you will need to do is just to apply for one. Make sure when looking at second chance banks that you compare their bad credit checking account offers. Not all companies will offer the same terms on second chance banking, so it’s worth doing a bit of consumer research on your part to secure the best possible deal that you can.

If your actions have put you in bad standing with a bank, it’s likely the bank will forward your information to ChexSystems which is a banking credit monitoring agency. Once your name has been added to the Chexsystems database, the record will stay for 5 years.

If you are in the ChexSystems database, you will be unable to open a bank account with any credible bank institution. The reason is that pretty much all banks use the ChexSystems to verify the suitability of new clients. If you try to open a new bank account and you are listed under ChexSystems, you will be denied your bank account application.

This can put many people in a difficult situation. These days, what can you do without a bank account? Many people with bad bank credit history don’t have any sort of bank account because their original bank account is riddled with debt or has been closed down. Without a bank account, a person will struggle to do even the most quotidian of financial transactions.

So what can you do? There is a solution, fortunately. This solution is called a bad credit bank account or “second chance banking“. 2^nd chance banking allows you to have all the functionality of a regular bank account minus the hassle of being rejected over and over for a bank account. A second chance bank account does not require a ChexSystems check. This means you are virtually free of your past banking transgressions.

However, you are going to have to pay something extra for the privilege of a bad credit checking account. You may have to pay an annual fee or pay extra banking fees. In addition, you may find your ability to cash checks restricted until you prove yourself a good customer.

If you want to get setup second chance banking, you are going to have to look online for an online bank that offers second chance bank accounts. You should have too much problems finding one as there are many such companies eager for your business. You should look at every second chance account offer you spot online and do comparison shopping. You can often get a deal on the banking  fees or some sort of extra perk thrown in, if you cherry pick between the best second chance bank account offers you spot online.