Getting turned down for a checking account catches many people off guard. The reason is usually a report you’ve never seen. Banks check your history in banking databases, the biggest being ChexSystems, and a past problem can follow you for years.
This guide covers what those reports hold, how to see and fix yours, and where to bank while you rebuild. It draws on the Consumer Financial Protection Bureau (CFPB) and the Office of the Comptroller of the Currency (OCC).
What banks check
When you apply for an account, most banks pull a report from a checking account reporting company. The two main ones are:
- ChexSystems
- Early Warning Services
These reports are separate from your credit reports. Equifax, Experian, and TransUnion don’t usually include your checking account history, so you can have a good credit score and still get denied.
Why banks deny accounts
The CFPB lists the common reasons:
- A past account was closed by the bank and you left an unpaid negative balance, such as unpaid overdrafts or fees
- The bank suspected fraud or misuse of an account
- You shared a joint account with someone who left a problem behind
How long the information stays
The OCC says negative information on ChexSystems and Early Warning Services reports generally stays for five years, and some items can stay for up to seven. Paying the debt won’t erase the record. It lets the bank update the entry to show the balance as paid.
Step 1: Get your report
You have a right to a free copy of your report from each checking account reporting company every 12 months. You also get a free copy if a bank denied you based on the report. The bank has to tell you which company it used in its denial notice.
- ChexSystems: Order online at chexsystems.com, call 800-428-9623, or write to Chex Systems, Inc., Attn: Consumer Relations, 7805 Hudson Road, Suite 100, Woodbury, MN 55125
- Early Warning Services: Call (800) 325-7775 or write to Early Warning Services, LLC, Attn: Consumer Services, 16552 North 90th Street, Suite 100, Scottsdale, AZ 85260
Read it line by line. Note the bank name, the date, the reason, and the amount for each entry.
Step 2: Dispute anything wrong
If the report shows an account you never had, a balance you paid, or a wrong amount, dispute it. The CFPB says to contact both:
- The reporting company (ChexSystems or Early Warning Services)
- The bank that reported the information
Write down what’s wrong, why, and what you want changed. Include copies of proof such as bank statements or a letter showing the balance was paid. The CFPB has sample dispute letters for both the reporting company and the bank. The process works like a credit report dispute. Our guide on disputing an error on your credit report covers the details.
If an account in your report was opened by someone else, you may be a victim of identity theft. See our identity theft recovery guide.
Step 3: Pay what you owe, if it’s accurate
If the negative balance is real, contact the bank that closed your account. Pay the amount or ask for a payment plan. Get a letter confirming the balance is paid, and ask the bank to update its report to ChexSystems or Early Warning Services.
The CFPB notes that some banks won’t open a new account for you until you pay off old fees you owe them. If you owe the bank you’re applying with, clearing that balance first may be the fastest path back.
Watch out for anyone who charges a fee to “remove” you from ChexSystems. Accurate information stays until its time limit runs out, just like on a credit report.
Step 4: Open an account designed for a fresh start
You can still bank while a report is on file. Look for:
- Accounts without overdrafts. Many banks and credit unions offer checking accounts that decline transactions instead of overdrawing, with no overdraft or NSF fees. Some banks approve applicants with negative checking history for these accounts.
- Credit unions. Some credit unions offer accounts to members with past banking problems.
- Second-chance checking. Some banks offer accounts for people with negative history. They may charge a monthly fee, so compare the costs.
- Banks that don’t use ChexSystems. Some banks rely on other screening. Ask before you apply.
Ask each bank directly: “Do you have an account for people with a negative ChexSystems report?” After six months to a year of good history, ask to move to a standard account.
Stay away from check cashers and prepaid cards with high fees as a long-term fix. They cost more over time.
Keep your new account clean
- Opt out of debit card overdraft coverage
- Set low-balance alerts
- Keep a small cushion in the account
Our guide on avoiding overdraft and NSF fees walks through each step.
If the bank or reporting company won’t help
File a complaint with the CFPB. The CFPB forwards it to the company, and companies generally respond within 15 days. For national banks, you can also contact the OCC through HelpWithMyBank.gov.
More guides on managing your money are in the Credit Center and Budget Center.
