ChexSystems

ChexSystems is both a check verification service and consumer credit reporting agency. Other credit reporting agencies broker data about how a consumer handles credit relationships, but ChexSystems is different — they provides data on how a consumer has handled their bank’s deposit accounts.

Most commercial banks and credit unions in the U.S. use ChexSystems as a step in the checking or savings account application process and a majority will not open a new deposit account for a customer that has a negative item reported.  This is because ChexSystems reports contain banking irregularities such as check overdrafts, unsatisfied balances, depositing fraudulent checks, or suspicious account handling that other banks have reported in the past five years.

In 1999, ChexSystems was successfully named a consumer reporting agency, and therefore, governed by the Fair Credit Reporting Act. Consumers are now able to retrieve a free ChexSystems report annually, dispute negative items and demand proof of the data contained in the report.