Check Your Checks: A Guide to Understanding the ChexSystems “Blacklist”

By: Amanda Girardi - Assistant VP and Market Relationship Manager, Affinity Federal Credit Union

The age of national consumer reporting is upon us, but what exactly does that mean? Given the recent Equifax breach, consumer credit reporting agencies are making headlines daily as people scramble to reconcile issues and ease worries. However, if there’s a silver-lining in this crisis it’s this: People now have an opportunity – and a reason –to familiarize themselves with the consumer-reporting agencies. ChexSystems, one of the most well-known national consumer reporting agencies, provides services to financial institutions to primarily assist its clients in assessing the risk of opening new checking or savings accounts.

The Dreaded “Blacklist”

Something as simple as bouncing a check or failing to pay a fee can cause your financial institution to report this activity to ChexSystems and create larger issues in the future, while also securing yourself an unwanted place on the “blacklist.” The blacklist implies that you have mishandled your accounts and may not be able to receive approval when opening new accounts at various financial institutions.

Banks and credit unions share information about these individuals and whether the institution closed their accounts. In return, an agency collects these consumer histories and creates risk scores for banks to use as they consider potential customers. According to the National Consumer Law Center*, more than 80% of banks/credit unions use consumer reports from agencies such as CheckSystems or Early Warning Services to help them decide whether to approve bank account applicants.

As you continue to keep track of your checking and savings accounts, it is important to know the necessary tips and tricks for staying off the blacklist so that you can continue to establish better banking habits and maintain a strong credit score.

Our Top 5 Tips to Bank Better:

    • Responsibly manage your credit. It is important to know your credit history and make sure you pay at least the minimum amounts on your monthly bills. By doing so, you stay on top of what you are spending and paying off – a habit that should ultimately aid your credit score.
    • Know what’s in your account from morning til night. At the end of the day, balancing your checkbook can be a lifesaver. While it may seem time-consuming and tedious, it is good practice to track with your checks. You should also make it routine to monitor your balances several times each day to confirm available funds.
    • Ask your financial institution about its process for its fees. Understand how your financial institution processes checks. For example, some banks will process the largest checks first.
    • Stop floating checks. In other words, don’t write a check before the money is available in your account. Be sure proper funds are available at the time you wish to write a check.
    • Discuss overdraft protection with your financial institution. Similar to the previous tip above, discuss overdraft services and options to prevent issues and additional fees in the future.

At Affinity, we have years of expertise advising our members on the importance of establishing good banking and credit habits. We aim to inform and educate not only our members, but anyone who is challenged to maintain good banking habits. For those who are concerned about their status, explore the ChexSystems website*, and when in doubt, don’t hesitate to contact a Financial Advisor for guidance.

Additional Resources:

Make the Most Out Of Your Debit Card with These Best Practices

Want Peace of Mind? Get Credit and Debit Card Alerts Now

The Benefits of Traveling Without Cash (Yes, Really)

Reasons Why You Need To Do Your Banking Virtually

* By accessing the noted link you will be leaving Affinity's website and entering a website hosted by another party. Please be advised that you will no longer be subject to, or under the protection of, the privacy and security policies of Affinity's website. We encourage you to read and evaluate the privacy and security policies of the site you are entering, which may be different than those of Affinity.