How to Dispute Your Record & Get Out of ChexSystems
Have you applied for a bank account and gotten turned down? If so, the reason likely has to do with bad marks on your consumer report file in the ChexSystems database. Perhaps you had some banking misfortunes in the past which resulted in your bank account being closed. This could happen from not paying certain banking fees such as overdraft fees or monthly service charges. There may have even been fraud or identity theft related to your bank account, even if you weren’t the one responsible for the crimes. Regardless, these issues will hurt your ChexSystems record for up to 5 years which means you won’t be able to open a bank account until then.
Fortunately, there are some circumstances when you should dispute the bad marks on your ChexSystems record. For example, misfortunes like identity theft, stolen checks, and bank errors are all things that are not your fault. However, they can still hurt your ChexSystems record because the system doesn’t understand the specifics of who is to blame. It will be up to you to file a dispute and give details about what happened with your bank account in the past. If they can see that the banking issues were not your fault, then ChexSystems will clear the bad marks from your record and give it a clean slate again.
Obtain the Proof You Need for a Dispute
If you’ve been turned down for a bank account and the reason has to do with your ChexSystems record, you need to obtain a copy of that ChexSystems record to see what it has on there. The bank representatives are likely not going to tell you the specifics of why you were turned down. That is why you need to request a copy of your ChexSystems record to see what markings are on there and whether they are erroneous. The good news is the Fair Credit Report Act allows every American to obtain one free copy of their consumer report every year. To request a consumer report, you can do so online or by phone, fax, or mail. It should take up to 5 business days for you to receive the report.
Once you receive the report, the next step is to review it and see what the problems are. If you failed to pay any bank debts from the past, you should see a mark which states “outstanding.” On the other hand, sometimes the report may still show “outstanding” even if you have paid off your past debts. This would be a scenario when you would want to dispute the report because it is inaccurate. Under federal law, ChexSystems is legally obligated to update the report accurately if the bank cannot show that the debt has not been paid. So, make sure there are no errors like this and that there are no marks related to uncontrollable circumstances like fraud, identity theft, and so on. Any marks related to this must be disputed right away.
Now if it turns out that your ChexSystems record is accurate and you really do have outstanding debts or issues from your past bank accounts, then your next step is to clear these debts. The report will tell you the exact total amount of your outstanding debts so if you have the money, then pay them right away. After the payment is made, request that the bank gives you proof of the payment as well as a written agreement which states that they will update your consumer report record in ChexSystems to show the debt was paid. If you’ve gotten all that, then request another consumer report from ChexSystems to see if the update shows up. Please note that requesting a second consumer report within a 12-month period may require you to pay a fee to receive it.
What to Expect During the Dispute Process
If you’ve determined that you have errors on your ChexSystems record, then you can start the dispute process. The first step that you will want to do is make a copy of your consumer report and any other documents which can back up your claim. The next step is to go through the original consumer report and your copy of the consumer report and circle all the areas on the list which you claim are erroneous. Now add the original report to your own personal files and then send copies of the report to both the bank that turned you down and ChexSystems.
When you send the report to ChexSystems and the bank, you need to include copies of those documents which support your claim. For example, if your report had unpaid overdraft fees on there but you really paid those fees, include documentation which proves you paid the fees. The more specific information and documentation that you provide ChexSystems and the bank, the more likely they will remove the bad marks from your report. After you have sent everything to them, it will take up to 30 days for their investigation to be completed.
The next step will depend on what happens within those 30 days. If you do not receive any response after 30 days, then you must send a letter to ChexSystems which demands the removal of your consumer report. If you receive a response within those 30 days from either the bank or ChexSystems and they claim the bad markings on your consumer report should not be there, then they will go ahead and remove those markings from your report. They may even supply you with a new copy of your consumer report which shows the update for free.
However, in the unfortunate circumstance that the bank or ChexSystems claims the bad markings on your consumer report are correct, there is very little else you can do from here. The only option left that you’re entitled to execute is writing a consumer statement about your dispute and then adding it to your file with ChexSystems. If you go to the ChexSystems Consumer Assistance page, you can download a blank Consumer Statement form to fill out. Once you fill it out, mail it to ChexSystems.
What to Do If All Else Fails
If your request to remove the bad marks from your consumer report has been denied or you have received no response to your request, then your last resort should be to file a lawsuit against ChexSystems in small claims court. The grounds of your lawsuit could be based on a violation of the Fair Credit Reporting Act where you claim that ChexSystems failed to keep their consumer report on you accurate, which is required by law. And if there are multiple violations of the Fair Credit Reporting Act, that would mean you are entitled to more compensation.
In most cases, ChexSystems will not want to go to court over a lawsuit because that would mean they’ll have to spend money on lawyers and possible compensation if they lose. Each violation of the Fair Credit Reporting Act would entitle you to one thousand dollars. Therefore, ChexSystems will be looking to settle out of court by agreeing to remove the bad markings off your consumer report. That way, they won’t risk losing any money. But remember, you must go through the dispute process with ChexSystems before you even consider filing a lawsuit against them. This is what the Fair Credit Reporting Act requires you to do.