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ChexSystems is the most often used credit screening system for prospective consumer banking clients. Look for an online business checking account that doesn’t employ ChexSystems if you want to circumvent this screening system.
Despite any prior bad financial behavior, these accounts enable you to create a new checking account.
What Is ChexSystems and How Does It Work?
ChexSystems is a consumer reporting organization that banks utilize to gather information about prior poor or bad banking conduct. Other financial reporting companies, such as Early Warning System (EWS) and TeleCheck, produce client files with information on their banking history, but ChexSystems is the most extensively utilized.
ChexSystems is frequently used by financial firms to assess new banking clients. Customers will only appear in ChexSystems if they have been reported for negative financial behavior, such as bounced checks, insufficient cash, or involuntarily closed bank accounts, by a bank or merchant.
ChexSystems does not maintain information on incorporated firms since it is a consumer-based system. However, sole owners might be reported to ChexSystems because they utilize their Social Security numbers to create business bank accounts, including company checking accounts.
“Non-ChexSystems” banks
Despite the fact that most banks utilize ChexSystems to screen new bank clients, a few institutions do not. Even if a banking institution does not employ ChexSystems, they may still use alternative techniques such as EWS, TeleCheck, or a credit report pull.
BBVA
You won’t have to worry about a refusal based on a ChexSystems report if you work with BBVA. This bank provides full-service business banking, as well as online and mobile banking options. You may enjoy free cash processing up to $5,000 per month with their Business Connect Checking account. It also doesn’t charge a monthly fee or needs a minimum balance. However, for the first investment, you’ll require $100.
A single proprietor account may be simply opened online by business owners. To establish an account, you must live in Alabama, Arizona, California, Colorado, Florida, New Mexico, or Texas.
SunTrust Bank
SunTrust Bank is a financial institution based in Atlanta, Georgia is another regional bank that’s great for business owners in Alabama, Arkansas, Georgia, North Carolina, Arkansas, Florida, Maryland, Mississippi, Tennessee, Virginia, or Washington, D.C. Because this bank doesn’t use ChexSystems to screen its applicants, you’re more likely to get approved for an account even if you’re on ChexSystems.
You’ll have access to several branch locations, ATMs, and online and mobile banking with SunTrust, which is a full-service bank. The $5 monthly charge is eliminated for the first 12 statement cycles, which makes the simple business checking account a good choice. You may also establish a business checking account with this bank without making a deposit.
Renasant Bank
Renasant Bank is a financial institution based in the United Kingdom. is a solid option for business owners in Alabama, Florida, Georgia, Mississippi, and Tennessee. This bank doesn’t use ChexSystems to screen applicants, so previous ChexSystems history won’t prevent you from opening a business account.
This bank’s basic business checking account has no minimum balance requirements and no monthly service fees. Furthermore, the first investment will only cost you $50. You won’t be able to establish an account online, therefore you’ll have to go to a branch to do it.
Woodforest National Bank
Woodforest National Bank is a financial institution based in Woodforest, offers the Second Chance Business Checking available for business owners with previous credit issues, making it easier to get approved for a bank account. This account has a monthly fee of $15, so it’s not exactly a low cost. However, the opening deposit is reasonable, considering it’s only $100.
Only residents of Alabama, Florida, Georgia, Illinois, Indiana, Kentucky, Louisiana, Maryland, Mississippi, New York, North Carolina, Ohio, Pennsylvania, South Carolina, Texas, Virginia, and West Virginia are eligible for this account. To open an account, you must go to a branch location.
Banks and credit unions
Apart from regional banks, it’s also good to consider banks and credit unions in the area. Smaller institutions and credit unions may be willing to take on slightly more risk with potential customers than larger institutions. Sometimes, it’s easier for smaller institutions to make exceptions for past credit issues based on your circumstances.
Navy Federal Credit Union, for example, offers business checking accounts that do not need a ChexSystems credit check. This credit union will make it simpler for business owners to re-establish their banking history. However, like with other credit unions, you’ll need to apply for membership and satisfy certain requirements, such as residency, affiliation, or employment.
How to Recover from a ChexSystems Rejection
Insufficient money, outstanding overdraft balances, returned checks, and fraud will all show on a ChexSystems report. If your ChexSystems report contains bad things, most banks will refuse to create an account in your name. The good news is that if you do have a bad ChexSystems file, you can restore it using a three-step approach.
1. Take a look at your ChexSystems report.
Viewing your file is one of the most crucial things to do if you get a bad ChexSystems report. If you’ve been rejected a bank account in the past, the reporting agency is likely to have sent you a letter. You may use this information to verify your ChexSystems membership and get a complimentary copy of your report. You are entitled to a free copy of your credit report every 12 months under the Fair and Accurate Credit Transactions Act (FACTA). You may quickly see your ChexSystems consumer report online.
2. Delete any ChexSystems items associated with your name.
It’s time to start cleaning up your ChexSystems file now that you’ve seen it. There may be inaccuracies, just as there may be on your consumer credit report. If you owe money on a bank account, you must contact the reporting financial institution to settle the amount. Despite the fact that the bank is not compelled to remove the item from your report, it will record it as paid.
Previous unpaid bank account balances failed checks and terminated accounts due to overdraft or fraudulent activity will be shown in your ChexSystems dossier. You’ll need to submit a ChexSystems dispute if any of this information is incorrect. ChexSystems will conduct an investigation and provide you with a response within 30 days.
Banking and returned check activities over the past five years are included in ChexSystems reports. Items that are more than five years old will not display in your file.
3. Take Care of Your Deposit Account
The most crucial aspect of maintaining healthy personal and corporate finances is properly managing your bank accounts. You’ll have no trouble opening an account in the future if you avoid bad banking conduct like returned checks and overdrawn accounts. If you’ve had trouble keeping track of your banking transactions in the past, there are a few things you can do to get back on track:
- Monitor your account: You can quickly check your spending by using online banking to see daily activity and balances. This helps you stay on top of your balances so you don’t spend more money than you have in your checking account.
- Maintain a minimum balance: Having extra account cash might help you avoid overdraft penalties if you have a returned deposit, unexpected expenses, or if you overspend unknowingly.
- Pay off overdraft amounts right away: If your account goes overdrawn, it’s critical to pay off the whole sum right once. Your ChexSystems report will not be affected by overdraft amounts until the account is terminated and the balance is not paid.
Receive electronic deposits instead of check deposits to help protect your account from unexpected overdrafts. You won’t have to worry about the deposit being returned as inadequate later since senders must have appropriate cash to execute an electronic transaction. If you deposit a check, don’t utilize the money until the check has cleared the issuing bank, which normally takes one to three business days.
Most Commonly Asked Questions (FAQs)
Is it possible to create a business account if you have a ChexSystems record?
Some banks, such as BBVA, are renowned for not using ChexSystems to screen banking applications, making it simpler to create a business account while in the system. Even if your firm is incorporated, banks that utilize ChexSystems, such as Bank of America and Chase, may run your personal information through ChexSystems before authorizing a business account.
Is ChexSystems included in your credit report?
ChexSystems does not report to the credit agencies, and your ChexSystems record is independent of your credit report. Instead, creditors, lenders, and financial institutions immediately disclose information on your credit report.
What’s the best way to find out whether you’re on ChexSystems?
After being rejected by a bank account, many individuals discover they’re in ChexSystems. Whether you’re turned down for a banking membership or a deposit account, the bank will let you know if the decision was made based on a ChexSystems report. You may, however, access the ChexSystems website once every 12 months for free to examine what’s on your report.
Conclusion
It’s not easy to find a bank that will offer you a banking relationship if you’ve had issues in the past five years. Everyone makes mistakes, and if you’re a business owner, you have the right to start again. With banks like BBVA, SunTrust, and smaller local banks that do not use ChexSystems are referred to as “non-ChexSystems” banks., you get a second chance at the banking relationship your business needs.
