Sorry, your bank account has been denied!
Ever received this notification from a bank after applying to open a checking account? If you have, it means that Chexsystem has blacklisted your business.
What is Chexsystems
ChexSystems is a bureau that monitors all your activities with banks and notes all the problems you’ve had with your checking accounts and gives a report based on their findings. It monitors whether you’ve had any bounced checks, left a bank while still owing them money, done any fraudulent checking activities and so on. The Chexsystem keeps the record for five years.
If your business has been blacklisted by check system, you will have a hard time getting financing for your business, the rates on your insurance policies will be higher, and your borrowing power is grossly compromised. However, you can change that. Here are some seven workable tips on how you can build your business credit when you’re in Chexsystems
1. Ask for the Chexsystems report
Request for your Chexsystem report. You are entitled to a report once a year. You can also have access to the report if you are denied an account in 60 days due to a report by ChexSystem. This is according to the rules given by the fair credit reporting act.
2. Find out if there is an error
The report shows specific transactions on your checking account. Just like any other institution an error is possible. The report will not appear immediately. They will mail it to you in around five days. Get the report and check if there is an error with the report.
3. Dispute the error
After you identify an error, dispute it with the Chexsystem. Get supporting documents. If possible, get all your receipts showing all the transactions done with the account with the error. Choose how to submit your dispute. One, you can submit online where you go to dispute information section, fill the form provided, and upload your receipt.
You can also submit your dispute through email or phone. All you need to do is go to the dispute information section and choose other ways to submit your dispute. Chexsystem, together with the account with the error, will take around 30 days to do their research. After the 30 days, you should make a follow up to make sure they have corrected the mistake.
4. Ask creditors to withdraw their report
If it happens you had a debt, and there was no error, pay your debt. Make sure you make copies of the paperwork used in paying the debt. Ask the creditors to remove you from the record and send a report to the Chexsystem.
5. Open a second chance account
In case you still need a checking account, you can apply a second chance checking account. They come with high fees and may not have all the features as the regular account but can still work. You can also use a prepaid account, it may have some monthly fees, but it’s better than not having anything. At least you will have an account to continue running the business.
6. Find a bank that doesn’t need the Chexsystem. You have been denied a checking account due to the Chexsystem report. Chances are you may need to have to look for another option that doesn’t require the report. Some banks don’t use Chexsystems. Research on them and find what works best for you, or even better you can check with Let Me Bank and get to find a bank account that suits your business
7. Sit and wait for the report to clear(in 5 years)
If all that doesn’t work for you, it’s not a dead-end, you can wait for five years and start a new record with the Chexsystem. Just make sure in the next round you do things differently and in the right way. Make sure you pay your debts on time. Keep all your payment records in case of an error. Make sure you check your Chexsystem report even when you do not have an issue.
No one wants a bad report on their business. You will do everything in your power to prevent a bad report. At times it’s probably never your fault, or there is nothing you could have done to avoid. An example is if it’s an error. It can happen to anyone; you just need to follow the procedure for disputing. These are some of the simple things that may help you not to find yourself in such a state.
Make sure you go through your Chexsystem report every year and confirm you have no error. It is so frustrating to be denied an account when you badly need it. If you check your report, you may spot the error and work on it before you get to a desperate point.