5 Best Practices To Avoid The ChexSystems Database

Posted in Chexsystems, Credit Repair Tips, Debit Advice on January 29th, 2014
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A large number of checking and deposit account holders face credit problems from time to time. Often, the issue is beyond their control or due to an error, but this may not stop them from getting into trouble with their banks. Unfortunately, a mistake or bad experience can impact your financial health far more than expected, which is why care must be taken to avoid things like ending up on ChexSystems.

What is ChexSystems and Why it Needs to Be Avoided

ChexSystems is a debit history database that is used by banks during risk assessment. The database contains information that details the misuse of a checking or savings account, and will show things such as:
- Overdrafts
- Bounced checks
- Check fraud
- Fees associated with the above
- The closing of an account with a negative balance (whether by you or your financial institution)
- Balances still owed etc.

viewing credit report

This information remains available for up to five years and could prevent you from being able to open another checking or deposit account. Incidentally, the database does not include FICO scores or other pieces of information that may otherwise paint a good picture of you as a consumer. As a result, one mishap could be enough to cause rejection regardless of your overall financial health.

Best Practices to Avoid Being on ChexSystems

While some banks have implemented their own “best practices” to reduce the number of people who get listed in the database needlessly, it is still up to consumers to do their part in avoiding the situation. As such, please follow these five tips so there is no reason to fix the problem after it occurs. Also, the actions that result in being listed does not have to be deliberate, so remember to always exercise caution when dealing with your credit and debit history.

1) Keep a close watch on your balance at all times: It is important to balance your check book regularly and to only spend what you have in the account. Overdraft fees and payments that are declined due to insufficient funds can work against you.

2) Formally close accounts: Far too many account holders remove the money from their accounts then wait for them to close automatically. Believe it or not, this counts against you in several ways. Among them is that fact that the dormant account could incur fees for having the zero balance. This means it could end up with a negative balance at the time it is closed and then end up in the database for future banks to see.

credit street signs

3) Comb through your statements carefully to spot errors or fraud: It is no secret that banks make mistakes or that fraud committed by someone else can ruin a person’s credit score. So, why would you leave anything to chance when dealing with your debit account? Exercise vigilance when handling statements so issues can be spotted and dealt with promptly.

4) Do not hesitate to report loss, theft, or misuse of your account: A few minutes is all it takes to ruin your credit history. The same holds true for your debit history. Therefore, you must report all cases of lost or misused cards, stolen checks or stolen debit cards immediately.

5) Stop automatic payments before closing accounts or switching banks: While it may not seem fair, automatic payments can continue after you stop using an account. When this happens, fees for bounced payments or overdrafts can accumulate which will then result in a negative balance. What this means is that an account that you handled responsibly for years could end up on ChexSystems for misuse after you close it.

Points to Also Note

1) It is possible to get your ChexSystems report if you feel you were denied a new account because of a past banking experience.

person holding debit

2) You can also request the report to check before doing business.

Finally, while it is up to your old bank to remove you before the five years, settling or disputing all owed balances can work in your favor. This is so because some banks will disregard the report if the amount has been paid off, or you have been in the database for a requisite period of time. Note as well that falling victim to bogus credit repair schemes can get you ChexSystems, so be weary of these.

How To Maintain An Impressive Consumer Profile With Banks And Credit Companies

Posted in Banking, Chexsystems, Credit Repair Tips, Debit Advice on January 4th, 2014

Consumers are finding it increasingly challenging to maintain impressive credit profiles. These individuals have a number of ways to spend their money and could have a hard time tracking digital and other records of their spending. As a result, people are making budgeting mistakes that are diminishing their reputations with banks, Chexsystems and all other organizations that will have a hand in determining their purchasing power. Following are six best practices that every consumer should be diligent in to maintain better credit.

1. Stay Abreast Of Your Account Balance

In the modern world of mobile phone payments and online buying, maintaining an up-to-date knowledge of your account balance can be a major challenge. The only real way to stay abreast of your spending is to use a platform that has the most up to date information concerning the cash that you have used. This will usually be the website for your own bank. The best banks make it easy and above all, free for their customers to use these platforms to check their account balances and to even balance their digital checkbooks. You can also try calling in by phone, but charges may be incurred if speaking with a live representative.

2. Choose A Payment Method And Stick To It

There are many ways to pay and each one of them will have an impact on how easy your money is to manage. People who are using a combination of personal checks, debit cards, credit charges and cash, will find it far harder to know how much money they have available than those who simply rely on debit or cash alone. Although there is certainly nothing wrong in switching up every now and then, it is important to track and record these special purchases carefully. This way, you won’t wind up overspending and accruing costly overdraft charges.

3. Avoid Floating Checks

A lot of consumers make the mistake of trying to float checks. This is the practice of writing and disbursing checks before their is sufficient funding in the accounts that these checks are drawn upon. This is a highly unethical practice and one that can result in a number of overdraft charges, depending upon how your bank works. In the digital age, floating checks does not work like it did in the past. Check recipients are now able to make instant deposits via their mobile phones, without ever visiting banks to manually deposit the actual, physical checks they have received.

This means that in just one day, your bank can be notified of a withdrawal and can in turn respond with an insufficient funds report. When banks charge account holders daily fees for insufficient funds, the resulting fines can be astronomical and difficult to resolve. Moreover, there can be contention and even legal issues between you and the payee if the bounced check and all related charges on this end are not resolved.

4. Beware Of The Dangers Of Short-term Loans

Short-term loans abound and these some of these offers hold a number of benefits for consumers who need immediate financial relief. For the nominal amounts that are often supplied, however, the resulting charges can be very difficult to manage. This is especially true for consumers who are already living in a very hand-to-mouth fashion. Payday loan debt and other short-term loan debts can have an impact on your credit score. Thus, if you need to accept one of these offers, make sure that you are using them wisely and as infrequently as possible. More importantly, make sure that you are looking for agreements that you are financially able to uphold. Always consider alternate forms of funding first.

5. Take The Time To Carefully Review Your Account Statements

Banks issue monthly statements that are disbursed to their customers either by e-mail or regular mail. If you have opted to receive all of your banking documents electronically, make sure that these are not winding up in your spam folder. A careful review of your most recent charges will allow you to identify and address any major discrepancies while the time for doing so still exists.

6. Get Overdraft Protection

Overdraft protection is something that many banks offer their customers in order to prevent digital or debit charges from being declined and checks from bouncing. If you have not signed up for this service, now is the time to do so. While this protection will usually entail a charge each time it is used, these fees will invariably be less than those of bounced checks and the costs of having important services terminated.