Debit reports may be used by your bank to keep you from opening an account

Most people are aware by now that every financial transaction they make is recorded by the three main credit bureaus and compiled, upon request by financial institutions, into a credit report. This credit report is a representation of your past and present ability to pay bills and repay loans. In addition to the report, the credit bureaus also provide the FICO score, a three digit number that assesses your overall credit worthiness on a scale than ranges from 300 to 850. This has all been well publicized, but few consumers are aware of another type of financial report, the debit report, that may also affect them. The debit report can be every bit as important for some consumers as a credit report, and negative information contained in it could prevent some consumers from opening a bank account.

The debit reports are a product of a company known as ChexSystems. They have compiled a database of information supplied by banks and other businesses of financial transactions by consumers. This database keeps track of how many checks an individual writes annually, how many of them are returned for insufficient funds, and whether or not those funds are promptly repaid. The database also contains information on overdrafts and bank accounts that have been forcibly closed. Information from this database is compiled by ChexSystems and presented upon request to subscribing banks who use it to determine if a potential customer is a good risk for a bank account. The banking industry is presented with billions of dollars worth of bad checks and unpaid overdrafts each year, and subscribing banks say that this system of debit reports offers them protection against such problems.

Unless you have a history of writing bad checks or overdrawing your account regularly, you probably won’t have an entry in ChexSystems’ database. On the other hand, errors do occur, and it can be difficult to straighten out problems with your ChexSystems debit report, particularly if you don’t know such a thing even exists! Most consumers don’t hear about a debit report until they apply for a checking account and are turned down. Most banks will refuse to allow anyone with a database entry to open a checking account. Some offer more latitude than others, however, so it may be worthwhile to shop around.

Few consumers can do without a checking account these days, so everyone should benefit from knowing that this system exists. Consumers are allowed to obtain a copy of their debit report (but not their score) once a year directly from ChexSystems. We have been unable to find a specific ChexSystems Website, but you may contact them, toll free, at 800-428-9623. You may also benefit from typing “ChexSystems help” into your favorite Internet search engine. This will lead you to numerous Websites designed to assist people who have had problems with their debit score.

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