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What to Do if You’ve Been Put on the ChexSystems Blacklist

By
Andrew Tavin
Andrew Tavin covers budgeting and credit scores for OppLoans. His experience as a comedian lends an approachable and humorous angle to his content and makes the scary parts of personal finance less intimidating for readers.
Updated on October 21, 2021
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If you have a history of negative banking behavior, your ChexSystems report will prevent you from opening or maintaining a traditional bank account.

Good news for fans of NBC drama The Blacklist: It’s been renewed for a seventh season! It looks like high-profile criminal turned FBI informant Raymond Reddington’s story is far from over! How many more criminals are on his list? Will we finally find out why he only agrees to work with rookie profiler Elizabeth Keen? Or have we already found that out?

We’ll be honest. We’ve never watched The Blacklist. We just wanted to start off with a blacklist that people generally seem to like before we get into another blacklist that people generally do not like: The ChexSystems blacklist.

What is the ChexSystems blacklist and what should you do if you’re on it? We investigated to bring those answers to you, much like Raymond Reddington does, we assume.


The ChexSystem “blacklist”

Let’s just get this out of the way: there isn’t actually a “ChexSystems blacklist” in the sense that you could be put on a list that would prevent you from ever opening a new financial account. But ChexSystems does keep track of negative financial behavior regarding bank accounts, and if you have a lot of negative financial behavior, it will certainly make opening a bank account more difficult. So it’s more like a list with various shades of dark grey, depending on your financial behavior.

“ChexSystems is a consumer-report agency that identifies and lists consumers who have misused credit or checking accounts, through methods such as neglected payment fees or bounced checks,” explained Jared Weitz, CEO and Founder of United Capital Source Inc.

“CheckSystems provides a report and risk score to banks running credit reports. If you are put onto the list this doesn’t mean you are necessarily blacklisted from getting a new checking or credit account, but it will make the process more difficult.”

Unlike the three major credit bureaus, ChexSystems only keeps track of your financial mistakes and not your positive financial activities. That means the way to a sterling report is not bouncing checks or getting any overdraft fees, as well as always paying your bills on time. Also, don’t commit fraud. Even a little bit.

What to do when you’re on the “blacklist”

Unfortunately, getting off the ChexSystems “blacklist” can require an even longer time commitment than improving your credit score.

“Your name can remain on the list for five years, so begin by getting your finances in order, make payments on time, and keep your current accounts balance positive,” advised Weitz.

You should also make sure there aren’t any errors on your ChexSystems report. After all, why should you suffer for something you didn’t even do? You can request a copy of your report from ChexSystems’s website and also use the site to dispute any errors you notice.

Alternatives?

If your ChexSystems report is accurate, there isn’t much you can do about it other than getting your finances in order and waiting. But you don’t have to go without a bank account while you’re waiting.

“There are banks and credit unions that do not use ChexSystems,” suggested Weitz. “Seek out setting up an account with them to help during the process of financial recovery.”

You could also look into getting a second chance bank account. These bank accounts have higher monthly fees, higher penalty fees, can’t be opened online, and are closely monitored. They might not be as nice or convenient as a traditional bank account, but if you can’t find a bank that doesn’t use ChexSystems, it’s better than going without a bank account at all.

Without a bank account, you won’t have a safe place to store your money, won’t be earning any interest on your money, and won’t have a reliable place to cash your checks without being hit with significant fees. Some second chance bank accounts even have a graduation plan. If you use the account for a certain amount of time without any issues, you can graduate to a regular checking account ahead of schedule!

You may also be able to get authorized on another person’s account. Of course, that means you could mess things up pretty badly for them, so be sure to take that responsibility seriously and make sure that you trust each other and can communicate properly before signing onto anything.

What was that about credit scores?

For the most part, the same sorts of financial behaviors that keep you from getting flagged by ChexSystems will nurture your credit score. Paying your bills on time and not letting accounts fall into collections are always good ideas.

But there are certain additional activities you’ll have to keep in mind when trying to improve your credit score. Most importantly, you’ll need to build a credit history. The best way to do that is to get a credit card (or a secured credit card if you can’t qualify for a regular card) and use it responsibly month to month. Responsible credit card use means charging no more than 30% of your debt limit each month and paying off that amount in full each time the bill comes around.

An important part of avoiding excess debt is building up an emergency fund that you can use to cover unforeseen expenses.

Having a bank account and access to credit are two very important foundations of a healthy financial life. That’s why keeping on ChexSystems’s good side and nurturing your credit score are so vital.

Article contributors
Jared Weitz

Jared Weitz (@jaredweitz) has been in the financial services industry for over 10 years. Due to his extensive work experience and deep network of close financial relationships, he handles a multitude of different finance options for his clients and contacts. Over the years, he has held positions in some of the largest business financing companies in the U.S. Some of his roles have been: Underwriter, Director of Business Development, Managing Partner and currently, CEO of United Capital Source, LLC.

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