Why am I having problems opening a bank account? Posted on February 22, 2016 by Glantzlaw
By Michael Stern, Supervising Attorney
If you are having difficulty opening a bank account, it might be due to previous issues you might have had with your bank or credit union.
These issues may include:
- depositing fraudulent checks;
- having the financial institution involuntarily close your account;
- having checks returned for insufficient funds (generally on a habitual basis not on an isolated occurrence);
- failure to pay the insufficient funds fees; and/or
- closing accounts with a negative balance.
Just as creditors report delinquent accounts to credit bureau agencies such as Equifax, Experian and Trans Union, many financial institutions report activities, such as the ones listed above, to ChexSystems— a consumer reporting agency. In fact, over 80% of the commercial banks and credit unions in the United States use this service to determine whether applicants can open various types of accounts with their institution.
ChexSytems is governed by the federal Fair Credit Reporting Act. Unlike the other credit reporting agencies that maintain credit file reports on consumers that include positive and negative activity, ChexSystems generally only reports negative information on accounts. This negative information can stay on your report for 5 years from the report date, unless the banking institution that initially reported it requests its removal or ChexSystems has to remove it under applicable law or policy. If you have never had negative banking behavior, you probably do not have a report with ChexSystems.
ChexSystems itself does not determine whether you can open a bank account or not; that decision lies solely with the financial institution. ChexSystems only supplies the information, so that the financial institution can make an informative decision.
If you are having problems opening a bank account you can request a copy of your disclosure report from ChexSystems.com or call 1-800-428-9623. You are entitled to a free annual copy of any existing report ChexSystems has on you. You may dispute any errors contained in the report; ChexSystems then has 30 days to investigate and remove any incorrect information. If there is a report with unfamiliar or false information on you, it is recommended that you pull a full credit report on yourself and consider the possibility that you have been a victim of identity theft.
Some tips to help avoid negative reporting to ChexSystems:
- review your bank statements and report any mysterious activity to your bank;
- balance your accounts on a regular basis and avoid overdrafts;
- have overdraft protection;
- stop automatic payments before closing any bank accounts;
- prior to closing any accounts, make sure any outstanding payments have cleared;
- resolve any outstanding fees you owe to the financial institution;
- if you are asked to deposit a check for someone and then to send a portion of the money to them or someone else, talk to your financial institution or your attorney to make sure you are not falling victim to a scam;
- protect your banking information (including your debit card personal identification number).
This article is only intended for informational purposes and is not meant to be all inclusive. If you have any questions about your particular situation, you should consult with an attorney.