Financial troubles can happen to anyone. If you've been through a rough time and had your checking account closed, you may be shut out of programs such as on-line bill pay. You may also be struggling to rebuild your credit.
Technically, no. Chexsystems is a nationwide consumer reporting agency that tracks checking accounts that have been closed due to bounced checks and unpaid fees. While a poor Chexsystems record cannot directly impact your credit score, non-payment of bills can impact your credit score. A poor Chexsystems score and a poor credit report often go hand in hand. Unfortunately, once you have a negative rating in ChexSystems, other banks may not want to handle your account.
If you've been declined for a checking account, you have the right to request a consumer disclosure report for review. If you find errant charges or indications of identity theft, you can dispute your Chexsystems score and file an identity theft affidavit.
If you've been through a rough financial patch and would like a fresh start, many regional credit unions offer Second Chance bank accounts. There are fees and some limitations, but with care you can build the 6 months of accurate checking account history needed by most credit unions to move into a regular account.
It's important to note that most credit unions do use Chexsystems or a similar system to track the fiscal histories of new clients; this is simply responsible due diligence on behalf of existing credit union members. However, credit unions are nonprofit organizations with a public service component. When you're starting over on your checking account, credit unions will most likely offer a less restrictive second chance account with fewer fees and restrictions and a better chance to move into a regular account sooner.
What credit union does not use ChexSystems? Actually, this monitoring system seems fairly common, but there are ways of getting a checking account while on ChexSystems blacklist. You need to find a credit union that doesn't rely solely on Chexsystems as the final decision in declining or accepting a new client. Below are a list of regional credit unions that offer access to a second chance checking account:
First Service Credit Union serves the Houston area and offers second chance checking or fresh start checking. This service requires a $9.00 monthly fee but includes a Visa debit card, online bill pay and online banking. After six months of successful use, you can move to a high yield or free checking account.
Near Cleveland, Ohio, you can set up a second chance account with Cardinal Credit Union. You will need to pay a monthly fee of $8.95 and you'll be able to get $250 in overdraft protection. Please note that this checking account will not come with any checks; you'll get 10 free bill pay transactions each month and a debit card.
Alliance Credit Union offers members easy access to ATMs and has a program called FreshStart Checking. This account requires a $10 monthly fee, access to 28.000 ATMs and free online banking and bill pay. If you can make deposits via direct deposit, the monthly fee may drop.
Texas-based Prestige Community Credit Union offers a Fresh Start program that has a $10 monthly fee once you set up direct deposit, free online bill pay, free access to check images, and an instant access Visa debit card. This card can be used with no fees at any Prestige or CU Here location; nominal fees may crop up if you withdraw cash out of this network.
With physical locations near Gallup, New Mexico, First American Credit Union offers a terrific Second Chance Checking program. You'll get 50 free transactions each month and free mobile banking. You will need to make a $50 minimum deposit and pay a $10 monthly fee. Once you've had 12 months of successful account handling, you can move to a regular checking account to reduce your fees.
Citizens in the Houston Metro area can enjoy access to 2nd Chance Checking at the Houston Metropolitan Federal Credit Union. If you don't live in Houston but have a family member that banks at HMFCU, you may still qualify. This 2nd Chance Checking account will waive fees if you maintain a balance of $250. Overdraft protection from your savings is an option, and there are several free electronic tools available once your account is set up.
The Freedom Checking Account available from the St. Louis Community Credit Union gives users several options. After six months of successful use with no overdrafts, you can upgrade to a less restrictive checking account. Within 60 days of opening, you can apply for $200 in overdraft protection privileges, and you'll get a free debit card, bill paying services and direct deposit options. If you live in or near St. Louis or have family that bank with St. Louis Community Credit Union, you may qualify for an account here.
To join American Airlines Credit Union, you must either work in the aircraft industry or have a family member who has a membership. The Ascend Checking with American Airlines Credit Union offers overdraft protection from savings, free online management and bill pay, access to ATMs at many kiosks across the country and a $9.75 monthly service fee. There's no minimum balance as long as you have enough to cover expenses, and access to credit education is also available.
Residents of Los Angeles will have access to the Foothill Credit Union, thanks to their Rebound Checking program. Once you sign up and the direct deposit data is working, you'll get a free Mastercard debit card, free bill pay and free electronic statements. Checks are also available, but there will be a fee for this option. Once you've had success with this account for a year, you can switch to an account with no fee. However, while you're building your new banking habits, be aware that the monthly service fee for this credit union is only $6.00 per month.
Checking accounts can be touchy, particularly if you're just starting out. Should you suffer a financial setback, or make a mistake because you have both checks and debit card purchases pulling out of the account, you can easily become overwhelmed. It's very easy to drop below your minimum and the find yourself hit with insufficient fund fees, late fees and the like. These fees can add up and make a checking account unusable and expensive.
With proper handling and a little practice, you can get your checking account back in control. However, if you've been blacklisted by ChexSystems, it may be hard to find a bank or credit union that will give you a chance. Because so many banks and credit unions use ChexSystems as a screening product, you'll need to check out credit unions in your area to determine which offer a second chance checking or Rebound program. If possible work local. If your employer pays you through a credit union, talk with them to see if you can get a checking account set up in spite of your Chexsystem status.
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Just out of college and ready to move off-campus, Patrick learned he had been a victim of identity theft when he was rejected by the landlord for having bad credit. After years of having multiple credit applications denied and fed up with having to pay security deposits up front to utility companies, Patrick decided to dispute Chexsystems and recover his credit. He educated himself on personal finance for years and, after successfully building up his credit record to a good score, he was approved for a mortgage and was finally able to buy a house in New York, where he now lives with his girlfriend and their dog, Winston.