Whether or not you know it, there might be an additional party that is monitoring how you use money, and thus casting a shadow over your financial profile. That extra party, which joins the major credit bureaus in determining your financial standing as you seek loans, is called Chexsystems.
Chexsystems does not watch how you use credit, but it does track how you use your bank accounts. Its rating can help or hurt you, but if you have some evidence that it is affecting your credit rating negatively, you might want to explore the following options for getting off its radar.
First of all, 80% of banks use Chexsystems, but that leaves a healthy 20% that don’t. You can shop around for a financial institution that doesn’t use Chexsystems, and then you will be free of its potentially incriminating record forever. Credit unions and smaller banks are a good place to look to free yourself from Chexsystems.
Best is to do the shopping yourself and ignore offers on the Web that promise to get you off Chexsystems. If you are ineligible for a credit union in your area, see if you have a family member that is eligible. Once they are in, immediate family members have a much easier time hooking on as well.
Tips for Getting Off Chexsystems
For those who can’t use banks without Chexsystems, here are a few tips for how to get off Chexsystems.
- More and more people are opting for direct deposit of their paychecks into a non-bank account and then using a debit card linked to that account. Perhaps you have noticed the many commercials that tout this option. Many consumers are bypassing banks (and their fees) altogether by opting for these debit card accounts.
- Consider the possibility of opening a savings account and eschewing a checking account. Once you have that savings account going, you can link it to PayPal, for instance, and bypass Chexsystems in some cases.
- If you are married, you might want to have your spouse apply for a given account and leave your name out of it entirely. This can lead to a new start with or without Chexsystems involved.
- A less common option is to open an account with a Canadian or other foreign bank that does business in the U.S. This can also take you off the Chexsystems bad list and radar.
- You can always go to the cash-only way of life. Take your paycheck to the bank upon which it is drawn, show your ID, and leave all banks out of your financial life. In cases where you cannot pay cash for a bill (online, for instance), get a debit card account or start a PayPal account linked to a savings account. Money orders can also be used in this case and are not prohibitively expensive; they just take time to obtain every time you need to pay in a currency other than cash.
In addition to the tips above, if you are having a hard time getting the money that you need because of a poor record verified by Chexsystems, you should know that this behemoth is not infallible. You might want to challenge the Chexsystems record of your use of bank accounts if you think that there is an error and you are being profiled more negatively than you think you deserve.
You can fight Chexsystems or escape its reach altogether, as indicated above.