Chexsystems - Everything I know!

Discussion in 'Credit Talk' started by DHK, Sep 20, 2002.

  1. DHK

    DHK Well-Known Member

    Due to the multiple postings about Chexsystems and the risk screening that banks use to open new accounts, I thought I'd share all of my thoughts and knowledge on the subject so we'd have (possibly) a single thread on the subject for future CreditNetters!

    Banks use Chexsystems to determine how financially responsible a potential customer is. A negative record shows that the customer is NOT financially responsible.

    Negative records are sent by banks to help ensure that these people's negative banking habits are reported. These records are forwarded and indexed by using your Social Security Number, Full legal name on the account, and which financial institution submitted the record.

    Chexsystems always reports POSITIVE records - until you mess up and receive a NEGATIVE record. Negative records may show up for all kinds of reasons. Some are: ATM abuse (deposit empty envelope to receive cash back), writing many bouncing checks, and keeping a negative balance in a bank account for a considerable length of time.

    Negative records stay on file with Chexsystems for 5 years from the date it was sent. For those 5 years, you will be unable to open a new account with any bank that uses chexsystem screening - unless you get upper management approval (good luck).

    Is it possible to remove a bad record? I always tell my declined customers to contact Chexsystems and find out which bank sent the record. Then find out how much is owed. Then talk to that bank's manager and see if you pay the amount in full if he will remove your Chex record. (Hey, it may not ever work, but trying is better than not having found out at all.) At least if it is PAID, it may be reported as PAID. (FYI: Even a PAID record is still grounds for new account denial.) If the reason for your record is abusing your account, then it's just better to wait those 5 years and start over fresh.

    Multiple Inquiries: There's no such thing as a Chexsystem FICO. So multiple inquiries shouldn't hurt your chances for approval for a new account. However, banks are more cautious than ever to open new accounts for people with multiple inquiries (I would say more than 3, with different institutions) over the past 3 to 6 months. If it's all with the same insititution, it probably won't matter as much.

    What is reported? When a bank does a chexsystem inquiry, they receive 3 main things: The year your SSN was issued, the State, and if you have a POSITIVE record or a NEGATIVE record. It will also display any inquiries made to Chexsystems over the past 3 to 6 months. All this information is given to the banker so he/she can make an informed decision to open the account, or decline the customer.

    Please post any further questions and hopefully I can help!

    David Kinder
    Recently Promoted to Service Manager at
    Wells Fargo Bank on 9-11-02!
     
  2. sassyinaz

    sassyinaz Well-Known Member

    and they are a CRA, subject to the FCRA.

    No offense, David, but you made them sound near saintly in their reporting and dare I say they are less accurate than the big 3.

    Being denied a bank account is an adverse action, just like being denied a charge card or being forced to pay higher interest rates or fees.

    Inaccurate reporting, is inaccurate reporting.

    Updated, complete, accurate and verifiable is the standard and chex falls wayyyyyyyyyyyy short.

    Sassy
     
  3. hkolln

    hkolln Well-Known Member

    I can remember going to pay for a purchase, writing a check and them denying me saying I needed to call blah blah blah...when I called all they said was they needed to VERIFY my freakin address!!! What is up with that? I hadn't moved in years. It was totally embarrasing to me and they had no merit denying my transaction...I have never bounced a check and could not understand why they rejected me!!
     
  4. kit

    kit Well-Known Member

    I've had this happen as well... but they said it was because I wrote multiple checks on the same day... ummm, its called shopping! I ask them to send my "report" and they told me they couldn't do that, but would send a letter-- I never received anything. The whole system is total BS.
     
  5. DHK

    DHK Well-Known Member

    Yes, they are a CRA subject to the FCRA.

    Yes, I agree about inaccurate reporting - it is DEFINITELY POSSIBLE. And yes, being denied a bank account is an adverse action.

    I never said that CHEXSYSTEMS were "saintly", but bankers make errors many times. Inaccurate reporting can be caused by a transposition in the SSN - hurting the innocent holder of that SSN.

    I'm not an official spokeperson for Chexsystems, but relaying information on how a bank uses Chexsystems for opening new accounts.
     
  6. newstdt

    newstdt Well-Known Member

    I have to say, at the prior bank I worked for, we did most of our "paperwork" right in our branch. When we were bought out by WAMU, things changed drasticly. EVERYTHING is handled "back office" and for the short time I was there the turn over was tremendous in every dept. These aren't the smartest cookies handling these things if you know what I mean. I can see plenty of errors happening this way, there's no personal involvement anymore, no giving customers a chance to explain or to notify them etc. It's all by the "numbers" and "timeline" and then "slam", you're reported.

    I think the banking industry has a lot of responsibility for this also. "Streamlining" and a "paperless" world can cause MANY errors.

    Just my thoughts.

    Newstdt
     
  7. clc18940

    clc18940 Well-Known Member

    as a former corporate banker I think what davidkinde was trying to describe is the situation from a bank branch employees' perspective. I didn't get any connotation that he was defending chexsystem whatsoever...just describing what comes up on the computer screen and given that info what branch managers are instructed to do by corporate management. It IS very difficult to remove negative info from chexsystems...especially if it is accurate. This system was developed years ago to contend with "check kiting" which was a major problem in the banking industry. Like all systems it is not perfect and it is and should be regulated by the FCRA.

    As for the poster's problem with writing multiple checks on one day...it is YOUR bank that is causing that problem not chexsystems. Many banks have these limitations...so it is a good idea to ask before you become a depositor.

    HTS,

    clc
     
  8. DHK

    DHK Well-Known Member

    Exactly!

    Thank you!
     
  9. lbrown59

    lbrown59 Well-Known Member

    Many banks have these limitations.
    What is their purpose in having the limitations?
    LB 59
     
  10. G. Fisher

    G. Fisher Banned

    So, the only information a bank screening a consumer is PASS/FAIL? There's no difference in bouncing a check for $10 and one for $10,000?
     
  11. PsychDoc

    PsychDoc Well-Known Member

  12. DHK

    DHK Well-Known Member

    Correct. "In for a penny, in for a pound" has relevance here. All we see at the bank level is pass/fail. IF you have one record to your name with a matching SSN, we cannot open the account for you. If we call Chexsystems directly for the account screening, it will list who submitted the record, but it won't ever list the dollar amount in question.

    Even after calling in directly and getting the information, bankers aren't allowed to disclose that information directly to the customer. That's why we give them a "Deposit Adverse Action Notice" of where they need to call to find out those records.
     
  13. DHK

    DHK Well-Known Member

    I see it as an account "safeguard" if your checkbook is ever stolen. It protects you and the bank against fraud and identity theft. Hopefully, the theif wouldn't get away with too much.

    Most debit cards also have limits on them as well. Many cards I see as a banker have a Daily $300 cash withdrawl limt, and a daily POS (Point of Sale) limit between $750 and $5000. If you tried to charge a purchase to your debit card more than that limit in a given day, the transaction will (should) be declined. I've had that happen to many customers. Those limits can be raised, but they must be raised by the bank manager of the bank where you opened up your account (at least at Wells Fargo).
     
  14. G. Fisher

    G. Fisher Banned

    Who made that rule-- the bank or CS?

    And, do all banks report all overdrafts-- no matter the size?
     
  15. DHK

    DHK Well-Known Member

    I'm assuming you mean the decision to open the new account. Chexsystems, just like the credit bureaus only supplies information. They don't make the decision to open or deny an account. That's up to the bank. At Wells Fargo, it is standard practice to deny anyone a bank account that has a record with Chexsystems with a matching SSN. We almost NEVER make any exceptions.

    As for overdrafts, (as far as I know) are only reported internally within your bank, not submitted to a "file" for you on any credit report (except with your bank). All banks monitor the number of OD's, returned checks, etc. on your account. At Wells Fargo, any account with more than 3 Overdrafts within 12 months is considered to be in negative standing. We don't report the number of OD's to Chexsystems. It isn't necessary. Now, if you leave the account overdrawn and never pay back the overdrawn balance, then THAT information is submitted to Chexsystems.
     
  16. mark

    mark Well-Known Member

    what does having a negative standing with Wells Fargo do to you if they don't report it to Chexsystems? I dont understand the need to call your account negative if it isnt going to be reported?
    know what I mean?

    Does it make your customer service from Wells Fargo even more crappier?
    edit: not a shot at you david, you are helpful..but that 800 number is a joke
     
  17. Butch

    Butch Well-Known Member

    Unless of course the customer suddenly became extremely wealthy and ready to make a huge deposit.

    lol
     
  18. DHK

    DHK Well-Known Member

    When your account is in a negative status, it makes it more difficult for Wells Fargo to extend other credit offers to deepen your relationship with us. Even I've had a hard time getting a new loan because of my "negative" account. All my OD's are paid, but it is a way for the bank to see what kind of credit risk I am by the way I handle my bank account.

    Yeah, I know about that 800# too! They HUNG UP on ME when I was connecting a customer to them! And I was calling from MY BRANCH! Trust me, you're not alone on that one.
     
  19. G. Fisher

    G. Fisher Banned

    Who made the rule about not disclosing to the consumer?
     
  20. DHK

    DHK Well-Known Member

    Yeah, I hear ya! But even then, if they don't pass the Chex, we don't deposit their checks.
     

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