Dear Dr. Don,
I haven’t been able to open a checking or savings account in more than 10 years. What can I do to open a bank account now? I’ve heard about ChexSystems, and applying for an account and then getting turned down, and then getting a written notification of the denial, but what do I do after I have the written denial? All I want to do is open a checking account so I can have direct deposit for my SSI check, and I don’t trust Direct Express.
— Dutchman Demand-Deposit
ChexSystems is a consumer reporting agency, or CRA, that monitors consumer banking relationships. Negative banking information, like writing a check with nonsufficient funds, or NSF, in the account for the check to clear, stays on your ChexSystems report for five years. From the information you gave me, you shouldn’t have any negative information on your report because you haven’t had an account in more than 10 years.
ChexSystems has to follow the provisions of the Fair Credit Reporting Act, or FCRA, including how it must respond to a dispute concerning its report. If you don’t agree with the result of a dispute investigation, you have the ability to insert a statement on your report. ChexSystems, like the credit bureaus, also has to provide a consumer with one free report annually. You can request your free report by visiting the ChexSystems Consumer Assistance website.
Bankrate’s Checking Basics feature on ChexSystems explains its role in the banking system in greater depth. According to that feature, “If you’ve been shut out of having a checking account — and your situation has nothing to do with fraud — you may be able to take a remedial class of sorts and get a new checking account in less than five years.”
Alternately, not every bank uses ChexSystems in making the decision to accept you as a customer.
I don’t share your distrust for Direct Express, the Social Security Administration’s program to allow people to receive their benefits on a debit card that isn’t tied to a bank account. If you can’t find a bank that wants you as a customer, I’d suggest that you try Direct Express. The federal government is moving toward requiring that all federal benefits be paid electronically. For people currently receiving federal benefits by check, the changeover date is March 1, 2013. You can learn more about the changeover on the GoDirect website.
Thanks to Edward Lafferty, public affairs specialist at the Social Security Administration, for helping me with this reply.
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