Many Americans possess an elementary understanding of both credit reports and credit scores and how each plays a significant role in a person’s financial life. A bad credit report can prevent you from getting a job. A low credit score can drastically increase how much you’ll pay for a loan or result in a rejection for a credit card. But fewer Americans understand the importance of another consumer reporting agency: ChexSystems.
ChexSystems operates as the credit bureau of the banking world. Your banking behavior is reported to the organization, which keeps a file on you and can send a report to a bank when you apply for an account.
So, if you left Bank A without repaying outstanding overdraft fees and attempted to open up an account with Bank B, the latter would see your negligence reflected on your ChexSystems report and likely reject you.
Some banks -– like Capital One –- are moving away from focusing on ChexSytems to determine whether or not to approve a new customer with a history of bounced checks or overdrafts. So one derogatory mark on a report may no longer prevent you from opening a new checking or savings account.
When Do You Get a ChexSystems Report?