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Just Ask Shannon – Chex System

February 1, 2009

Chex System

Dear Shannon:  I’m currently 20 years old and not in school at this time.  I want to open a checking/savings account, but I’ve had trouble doing so since I’m in the Chex System.  If I pay off what I owe my former bank, will I be able to open a new bank account? Also does that affect my credit score? Monikah, from Las Vegas, NV.

Dear Monikah: The Chex System is a network of banks and financial institutions that collects data on bank accounts that have consistently been mishandled or abused due to non-sufficient funds (NSF), overdrafts, or writing checks on closed accounts.  Over 80% of all banks and credit unions are members of this system.  If you bounce a lot of checks, your bank is likely to report you to the Chex System and this information can remain in that system for up to five years.  Keep in mind, this is a separate reporting system for banks, so it has no impact on your credit report. 

Paying the bank will not remove your negative information from the Chex System.  However, it will show that the account has been paid. Then it will be up to the individual bank or credit union to decide whether or not they will take a chance on you. 

After you pay off the account, you will probably have a better shot of going to a smaller local bank or credit union.  You will need to explain your situation and show why you won’t repeat the same mistakes with this new account.  You may be able to persuade the bank officer to do this if you can show that you have a substantial amount with which to open up the account or that you have stable income (i.e., showing pay stubs). 

You can order a copy of your Chex System report at https://www.consumerdebit.com/consumerinfo/us/en/chexsystems/report/index.htm

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