Bad Check Databases: Chexsystems Overvies

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Those who write bad checks to merchants or overdraw checking accounts are usually reported to bad check databases. These companies, like Chexsystems, exist to help protect banks and retailers such as grocery stores from people who habitually mishandle banking accounts or write bad checks. However, Chexsystems does not distinguish between a one-time mistake and chronic account problems in most cases. Thus simple errors can lead to a period of banking difficulty if a person is reported to any of the bad check databases.

How long does a Chexsystems report last?

“How long does a Chexsystems report last?” is a common question. As a credit bureau, Chexsystems has the legal right to report negative information as long as 7 years. However, the company policy as of 2009 is to report bad check incidents for 5 years.

Will paying the overdrawn account or bounced check erase the Chexsystems report?

Consumers often ask, “Will paying the overdrawn account or bounced check erase the Chexsystems report?” The short answer is no. Chexsystems acts like any other credit bureau, and still reports the fact that the incident happened. They must legally note it as paid, which may help some other banks be willing to issue another account. However, only the reporting bank can order Chexsystems to remove the entry entirely before the five-year period is over.

Can I write checks when listed on Chexsystems?

“Can I write checks when listed on Chexsystems?” is another common question. Being listed on Chexsystems alone usually means only other banks can access your Chexsystems file. However, if you are also reported to SCAN (Shared Check Authorization Network, which is owned by Chexsystems), for bouncing checks at your local grocery store or another retailer, then you will have a hard time writing checks at businesses that run your identification through the SCAN system.

Can I get another checking account if I am in Chexsystems?

Many people wonder, “Can I get another checking account if I am in Chexsystems?” It is still possible to get a banking account while listed in Chexsystems. Again, it depends on if your desired bank or credit union uses the bad check database, and their policies on people listed in Chexsystems. Some banks will allow people listed in the file once to open another account. Others will issue accounts without checking Chexsystems. Some financial institutions will not allow anyone in Chexsystems to open a savings or checking account.

This post is part of the series: Trouble With Checking Accounts

Checking accounts can be a source of convenience–or major trouble. Learn about whether debt collectors can freeze your checking account or take your wages, the facts about bad check writing databases, and whether you can go to jail for bouncing checks.

  1. Chexsystems FAQ
  2. Can You Go To Jail for Writing Bad Checks?