Second Chance Checking
by Lisa Phillips
updated December 2009
by Lisa Phillips
updated December 2009
| Copyright RebuildCreditScores 2010 All Rights Reserved |
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Most banks and now credit unions, run a Chexsystems report when opening checking accounts
and some banks will pull a credit report as verification of your identity. More frequently banks
and credit unions are using Early Warning Services (EWS) in addition to Chexsystems.
and some banks will pull a credit report as verification of your identity. More frequently banks
and credit unions are using Early Warning Services (EWS) in addition to Chexsystems.
Early Warning Systems exchanges consumer
information between organizations to detect
deposit, payment and identity fraud in the
financial systems. They collaborate with many
institutions in exchanging and gathering
information.
Second chance checking is an industry wide
practice which allows customers who are in
Chexsystems to open a new checking account.
Most often those items in Chexsystems must
be paid; or, if they are not paid, they must be a
small amount. When fraud is indicated in
Chexsystems, it may be more difficult to open a
new checking account.
information between organizations to detect
deposit, payment and identity fraud in the
financial systems. They collaborate with many
institutions in exchanging and gathering
information.
Second chance checking is an industry wide
practice which allows customers who are in
Chexsystems to open a new checking account.
Most often those items in Chexsystems must
be paid; or, if they are not paid, they must be a
small amount. When fraud is indicated in
Chexsystems, it may be more difficult to open a
new checking account.
In this case your options may be limited to prepaid cards which act much like bank accounts
until the items in Chexystems clears or until you dispute the item and have it deleted. It is
extremely important to know what is in your Chexsystems report prior to opening an account.
Banks do not always tell you when they have reported you to Chexsystems or inform you how
they reported you.
No chexsystems banks may be banks that do not use chexsystems at all or they may be banks
that overlook your chexsystems records as long as the items are paid. Even if a bank does not
practice second chance banking you may still be able to open an account as long as the report
shows the item as paid and fraud is not indicated.
Despite Chexsystems, a branch manager can always override a negative report and allow you
to open an account. The only problem with a system override at the branch level is that once
your account is up and running, the loss prevention department may decide to close it at a later
date if they determine you are a high risk customer.
They will not warn you if they decide to close it. Banks sometimes perform what is known as
"sweeps" where the loss prevention department goes through new accounts, runs Chexsystems
and decides to close accounts based upon any negative information contained in the report.
Sweeps are very problematic. This practice is rather unfair and can cause huge headaches.
They are unannounced and your bank account is frozen. Debits and credits are returned. If you
have a check, automated payment or even a direct deposit coming through it will be returned.
The funds in your account can be put on "freeze for up to thirty days. If this happens go into
your branch and speak with a manager immediately. There is no federal law that says a bank
can indiscriminately hold your money for thirty days. When bank managers are pressed on the
issue they usually cave in. It is always a good idea to have more than one bank account when
you've been in Chexsytems or you are currently in Chexsystems. Smart Savers are switching to
WTDirect. 1.26% APY. No Fees. FDIC Insured. Open Today!
NEXT: Second Chance Banks
until the items in Chexystems clears or until you dispute the item and have it deleted. It is
extremely important to know what is in your Chexsystems report prior to opening an account.
Banks do not always tell you when they have reported you to Chexsystems or inform you how
they reported you.
No chexsystems banks may be banks that do not use chexsystems at all or they may be banks
that overlook your chexsystems records as long as the items are paid. Even if a bank does not
practice second chance banking you may still be able to open an account as long as the report
shows the item as paid and fraud is not indicated.
Despite Chexsystems, a branch manager can always override a negative report and allow you
to open an account. The only problem with a system override at the branch level is that once
your account is up and running, the loss prevention department may decide to close it at a later
date if they determine you are a high risk customer.
They will not warn you if they decide to close it. Banks sometimes perform what is known as
"sweeps" where the loss prevention department goes through new accounts, runs Chexsystems
and decides to close accounts based upon any negative information contained in the report.
Sweeps are very problematic. This practice is rather unfair and can cause huge headaches.
They are unannounced and your bank account is frozen. Debits and credits are returned. If you
have a check, automated payment or even a direct deposit coming through it will be returned.
The funds in your account can be put on "freeze for up to thirty days. If this happens go into
your branch and speak with a manager immediately. There is no federal law that says a bank
can indiscriminately hold your money for thirty days. When bank managers are pressed on the
issue they usually cave in. It is always a good idea to have more than one bank account when
you've been in Chexsytems or you are currently in Chexsystems. Smart Savers are switching to
WTDirect. 1.26% APY. No Fees. FDIC Insured. Open Today!
NEXT: Second Chance Banks
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