What’s the Difference Between ChexSystems, TeleCheck, and EWS?
Most people are aware that there are three major credit bureaus which are responsible for collecting various debt and credit information about consumers from banks and other financial institutions. These three credit bureaus are Equifax, Experian, and TransUnion. People with loans and outstanding debts have their payment progress tracked through these various agencies.
However, there are three other agencies which are consumer reporting agencies. These specifically track the financial relationship that consumers have had with financial institutions like banks. The history of their checking account activities and whether they followed the rules of their banking agreement is what gets looked at by these agencies more than anything else. The three main consumer reporting agencies are ChexSystems, TeleCheck and Early Warning System (EWS). Although they all have a similar purpose in helping financial institutions maintain good accounts, they are different in terms of what they track and what they report.
How ChexSystems works
ChexSystems is the most widely used consumer reporting agency by financial institutions. When a person goes to a bank and applies for a new account, such as a checking account, this bank would request a service from ChexSystems to investigate the applicant’s banking history and see if they had any negative issues with their past bank accounts. This account verification service that ChexSystems provides banks will allow bankers to make an informed decision as to whether they can trust the applicant with a new account or not.
If you have a negative report in the ChexSystems, there are plenty of reasons for why that might occur. For example, if you accumulated overdraft fees on a past bank account and you did not pay those fees back, that will leave a bad mark on your ChexSystems consumer report. Also, if you did not pay back the overdraft money to the bank, that is even worse. Any time you avoid paying money that you owe back to a bank, it will leave a bad mark on your report for 7 years.
This doesn’t have to just be a checking account either. If you have a savings account and misuse that in some way, that will also affect your ChexSystems report. Perhaps you withdrew from your savings account too many times in one month. Maybe you didn’t maintain the minimum balance on your savings account and failed to pay the monthly charge because of it. Any reason like this could cause a problem on your report so remember that.
How TeleCheck works
TeleCheck is a consumer reporting agency that monitors checking account transactions and makes a record of any check transaction that is bad in some way. This could be when someone writes a bad check or commits check fraud. The goal of TeleCheck is to protect the financial institutions that hire them by ensuring the checks of their customers are good. If you write a check to somebody and they are not able to cash it, chances are it is because TeleCheck has informed the bank that your checking account is suspicious and that it might have fraudulent activity on. So, until you clear up this matter, you won’t be able to write any more checks.
In addition, TeleCheck can also stop you from opening a new checking account as well. After all, why would a bank want to give you a new checking account if you have a history of writing bad checks or not paying your banking fees? TeleCheck will even show if you had your previous checking account involuntarily closed due to misconduct. This looks worse on your report than just writing bad checks.
How EWS works
Early Warning Services is the newest consumer reporting agency that was started by big banking corporations like Wells Fargo, BB&T Corporation, and JPMorgan Chase. They are similar to ChexSystems in that they keep a record of any misconduct that takes place on a bank account. However, they also notify financial institutions if they believe a suspicious or illegal transaction has just been made. That way, these institutions can investigate the transaction right away and determine if it was illegal or not. If it turns out that it was, then appropriate action can be taken against the account holder before they do any more damage.
If you go to open up a new bank account and you already have an existing record with Early Warning Services, it will be virtually impossible to get approved for a checking account, or even a savings account. The best thing you can do is clear the debts and issues you made in the past and try not to cause any more problems again. On the flip side, though, Early Warning Services can be an asset to account holders who are legitimate and honest. If you’ve proven to be responsible for writing checks and maintaining your bank accounts, then the transactions you conduct will get processed faster because of Early Warning Services’ good record on you.