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As a result of check abuse and fraud, financial institutions lose billions of dollars annually. In recent years, a system that works similarly to how credit reporting agencies operate has been set-up to help control illegal banking activities. The system is called ChexSystems. If you mismanage your checking and/or savings account, expect your name to end up in the ChexSystems database. By your name being listed with ChexSystems, you will be adversely affected for five years.

Who uses ChexSystems? and Why?
When looking to open a new account, every bank is going to run your personal information through ChexSystems to see what kind of banking history you have. Specifically if you have ever bounced checks or have performed any sort of negative banking activity. If your name is in the ChexSystems database, expect your bank application to be rejected.

Most people do not know about ChexSystems or that they are in the database only until after they are turned down when trying to open up a new checking account. Many consumers complain that ChexSystems are used by financial institutions arbitrarily. Specifically by picking out all applicants including those that are not intending to commit any form of illegal activity but have mismanaged their accounts by overdrawing funds or by accidentally bouncing a check/s by in the past year or so but have learned from their mistakes.

It is important to note that if you a bounce one or two checks, you probably will not end up in ChexSystems. However, if your account ends up closed as a result of being overdrawn, then you will end up there.

Common ways to avoid the ChexSystems database:
  - Never write checks when you do not have sufficient funds in your account to cover them.
  - If you have direct deposit from your employer, find out how long it is going to take your bank to deposit the funds into your account.
  - Always be aware of what your account balances are so that you can keep your checkbook balanced and avoid bouncing checks.
  - Prior to closing your checking account, be certain that all of your checks have cleared and that there are no pending debits.

** If you believe that you have been mistakenly reported to ChexSystems, contact them and dispute the item.

How to improve your bad checking status:
Did you know that there are checking account schools? If you have been denied a checking account because of careless mismanagement, and not because of fraud, you should consider taking one of these classes. It is possible that the checking account class will help you obtain a new account in less than five years.

There is a one day, six hour checking account class offered by Get Checking. These classes are typically run by Consumer Credit Counseling Agencies. Fees will vary from state-to-state but typically range between $35 - 50. As a student, you will learn everything there is to know about managing and owning a checking account and how to be fiscally responsible. Individuals that pass the final test will be eligible to open a checking account at their participating bank. Please note that in order to receive your certificate, you must also prove that any debts owed as a result of bounced check have been settled.



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