Most of us are well familiar with the different credit reporting agencies. There are three primary ones, which are used by financial institutions and lenders to determine whether you are a good risk to lend money to, the terms that you should be given, and the interest rate that is applicable depending upon your credit score. It is this rating system that can really make a difference in your ability to buy a house or a car, because financial institutions are looking for a specific score that will help them to know if you are a good credit risk or not.
Most of us are quite familiar with this. We have long dealt with making sure that we are paying our bills on time, including credit cards, so that our credit score would raise. There are many commercials out there that are teaching you how to improve your score, what to do if you find yourself in a situation where your score is bad, or how to repair your credit if you have had a bankruptcy or other financial setback. This has become one of the primary ways that lending companies are determining your value.
Now the Banking Industry Is Setting a Rating on You
If this is not disturbing enough to you, knowing that this rating is standing in the way of you getting a car or home loan, something else has popped up that you might want to be aware of. This is the Chexsystem.
If you are unfamiliar with this term, this is a new system to rate you in terms of how well you have handled your bank accounts. If you have had issues where you closed an account, had a negative balance when your account was closed or had any other kind of issue with the bank, then this information appears in your Chexsystem report.
Not only is your past history monitored by this report, but also banks are able to track your daily history of how much money has been in your account at any point this is intended to give financial institutions and the ability to know if you are a good risk to open an account with their bank, and whether you incur such things as overdrafts, negative balances, and other issues that the bank may be concerned with.
What Banks Are Doing to Help
This is probably disturbing you whites a bit, and that is with good reason. The last thing you want is to have another indicator of your financial failures coming back to haunt you. It may not be very long before you appear at a bank to start an account and are told that you can’t open one because your Chexsystem score is low. This can make it so that eventually you have no option for opening a bank account at all.
Some banks are recognizing the problem with using this system, and are allowing consumers to open what are called second chance checking accounts. These give a person the opportunity to still open up a bank account, but with greater restrictions placed upon it to protect the bank. This can mean that you have a limited amount of money that you can deduct from the account each day, the number of transactions that you can have on your card or account, in general, are limited, and other factors can be implemented that give the bank some form of protection so that they can feel more confident about offering you a banking account.
Can I Get Out of this System?
Some of you may be looking at this article now and are wondering how getting out of Chexsystem at (https://aaacreditguide.com/get-out-of-chexsystems) is possible? The fact is that it is not possible at all. This is like the credit reporting agencies. The only way that you can ensure that you do not appear in the system is if you don’t open a bank account. Most of the major financial institutions are using this system these days, meaning that if you go to most of the well-known banks you are going to find that they can pull up your report to make a determination about you.
However, there is one way to get around it. Those who belong to some kind of organization that offers a credit union instantly exempt themselves from this policy. If you do belong to some union or other organization that is associated with the credit union, it may be time to look into doing your banking there.