There are several financial institutions like credit unions and banks that don’t use ChexSystems to determine whether you are trustworthy enough to open an account. Since ChexSystems contains information on your previous account history, a poor ChexSystems report could make it difficult for you to open a new account. Therefore, institutions that don’t review these files are also called second-chance banks or credit unions.
When you apply for a new bank account, many financial institutions verify your credibility using a reporting agency called ChexSystems. If ChexSystems has adverse reports recorded on your file, institutions may deny you service.
These days, you can’t live without a bank account. So what can be done if banks are denying your request for a new account because of ChexSystems? One option is to find a bank that doesn’t use ChexSystems.
In this article, we’ll review everything you need to know about banks that don’t use ChexSystems. We’ll explain what ChexSystems is, how ChexSystems works, and look at some of the best banks that don’t use ChexSystems.
What is ChexSystems?
Is this your first time hearing about ChexSystems? If so, you’re not alone. Most consumers aren’t familiar with ChexSystems until they’re denied a new bank account. So what is ChexSystems?
ChexSystems, Inc. is a nationwide specialty consumer-reporting agency (NSCRA) governed by the Federal Fair Credit Reporting Act (FCRA), as well as applicable state laws. This agency compiles and maintains files on consumers in the United States.
ChexSystems collects and manages records primarily related to banking trustworthiness. These files are then made available to banks and credit unions so they can decide if you’d be a risky customer.
Defining account screening NSCRAs
A bank account screening NSCRA owns and provides reports from a database containing information about a consumer’s history in dealing with bank accounts. The two most prominent bank account screening NSCRAs are ChexSystems and Early Warning Services (EWS).
- ChexSystems is a subsidiary of Fidelity National Information Services (FIS).
- Early Warning Services (EWS) is a company that is jointly owned by Bank of America, Truist, Capital One, JPMorgan Chase, PNC Bank, U.S. Bank, and Wells Fargo.
- More than 80% of banking institutions use reports NSCRAs like ChexSystems to decide whether to approve someone for an account. — National Consumer Law Center
What information could be included in your ChexSystems consumer file?
ChexSystems is a very thorough report and contains records relating to multiple aspects of your life. For instance, the following may all be recorded in your ChexSystems consumer file. (source)
- Medical records or payments
- Tenant history
- Employment history
- Insurance claims
- Banking account applications or openings
- Checking account activity, including any checking account closures (especially related to consumer negligence)
- Penalty fees charged while the account was active
- Reasons for bank account closure
- Any returned (bounced) checks reported by retailers
- Number of inquiries made about you by financial institutions
- How many and how often you placed check orders (source)
How do banks use ChexSystems records?
Many banks use ChexSystems to investigate if you have a banking history with accounts frequently being overdrawn, checks often bounced due to insufficient funds, involuntary account closures, and unpaid negative balances.
When opening a new checking account, some banks will first review your ChexSystems report before they approve your request. If a bank sees negative banking history on your ChexSystems report, you may be denied the approval of even a standard checking account.
That being said, there are some banks that will overlook negative banking history. There are also many banks that don’t use ChexSystems and will open accounts for customers despite their poor banking history. Both of these categories would be referred to as second-chance bank accounts.
Can you dispute the accuracy of information registered on ChexSystems?
In short, you can dispute the information registered with ChexSystems. To begin, you need your ChexSystems Report to initiate any disputes. By law, ChexSystems is required to give you a free checking account report, upon request, once every 12 months. If you requested your report within 12 months but were declined to open a new bank account in the past 60 days, and your ChexSystems report was used in the decision-making process, you can still obtain a free report from ChexSystems.
Your checking account report can be requested from ChexSystems by phone or by mail. See their official website to find the current contact information.
Once your dispute is submitted, ChexSystems will investigate the inaccurate information in question. They do this by contacting the financial institution with which the account in dispute was held and verifying the bank’s records. If discrepancies are found, they will then adjust your history on file and fix the previously recorded inaccuracy.
If you feel like you are spinning your wheels trying to get in contact with ChexSystems, you have the right to directly dispute with the bank or credit union that reported you. However, this should be your last resort.
You can also directly ask the bank for the removal of a negative report if you have an outstanding debt to the bank. This will best meet with success though if you are willing to pay the amount in question when requesting the removal of the report.
Financial institutions that are considered second-chance banking
If you’ve recently been denied opening a new checking account, second-chance banking could be a great alternative. Generally, the approval requirements are lower than traditional checking accounts, making it easier to get a new bank account.
How does a second-chance checking account work?
There are two primary types of banking situations that would be considered second-chance banking. If you’re signing up for a checking account, this could also be called a second-chance checking account.
The first situation would involve opening a checking account at a bank that uses ChexSystems, but is willing to overlook negative history. This type of situation can help you to begin building up your ChexSystems report again as you wait for previous negative records to be removed (which can take up to five years).
The second situation is where a bank or credit union doesn’t check consumer reporting agency banking history, such as ChexSystems reports. Fortunately, many banks that don’t use ChexSystems have the same features and perks as banks that use ChexSystems.
So what second-chance banks and credit unions don’t use ChexSystems?
You may be surprised to know that there are many banks — even large nationwide institutions — that don’t use ChexSystems. Some banks that don’t use ChexSystems offer great checking accounts with no fees and have features such as fraud monitoring protection and advanced direct deposits.
Here are some of the top banks and credit unions that don’t use ChexSystems or EWS (defined above) and offer checking accounts despite bad banking history.
- Current Banking
- Navy Federal Credit Union
- United Bank
- First National Bank Texas
- Truist Bank
- Regions Bank
- PNC Bank
- U.S. Bank
You can also review the institutions listed in the comparison tool below to find an appropriate checking account for your spending habits.
Upgrade offers online checking accounts with great features for those interested in cashback rewards without the need for a credit card.
Upgrade Rewards Checking Account
The Upgrade Rewards Checking Account offers up to 2% cashback on everyday expenses at convenience stores, drugstores, gas stations, monthly subscriptions, restaurants, and cell phone bills. Account holders also get an unlimited 1% cashback on all other debit card purchases. (source)
Varo offers full-service online banking with no monthly fees or minimum balance on their accounts. You can deposit checks using the mobile app or deposit cash at 90,000+ retail locations using Green Dot Reload® (retail service fee applies).
One great feature of their online checking account is advanced direct deposit. If you have a direct deposit set up, you can get your paycheck up to two days early. (source)
You can also earn cashback at select brands every time you use your Varo Bank Visa® Debit Card. This debit card comes with Visa Zero Liability which guarantees that you won’t be held responsible for any unauthorized charges using your card.
Varo offers excellent savings tools. Save Your Pay automatically transfers a percentage of every direct deposit to your Varo savings (you choose the amount). Save Your Change rounds up every transaction to the nearest dollar and transfers the amount to your Varo savings.
Depending on the amount in your Varo savings, as well as other factors, you can earn from 2% to 5% APY on your available balance. Compared to the national average of 0.08% (as of the August 15, 2022, FDIC report) this will be a huge boost to your yearly savings. (source)
Chime is an online bank that was created with customers in mind. This online bank offers an online checking account with no monthly fees attached and no minimum balance fees.
Chime checking accounts offer fee-free overdraft protection of up to $200 with SpotMe. SpotMe is an optional service offered by Chime requiring a single deposit of $200 or more each month in qualifying direct deposits to the Chime Spending Account.
Every time you swipe your debit card, Chime has a feature that rounds up debit purchases to the nearest dollar. Chime then transfers the round-up from your checking account straight into your savings, making it a great way to make your money grow over time.
You will also get access to over 60,000 fee-free ATMs, many of which are at nationwide stores such as Walgreens, CVS, and 7-Eleven. The Chime app offers a feature to find the closest fee-free ATM near you.
Chime offers decent APY on their savings accounts — about 12 times the national average. No maximums on interest earned or minimum balance are required. Just like most in-person branch banks, your funds are FDIC-insured for up to $250,000. (source)
Sable was created with the purpose of making sure everyone can have access to banking, whether they have a U.S. financial history or not. This company has the goal of helping you build credit quickly, while also having quick global access to your bank.
With a Sable MasterCard debit card, you receive 2% cashback on favorite brands and unlimited 1% cashback on select brands. Sable will also double the manufacturer’s or retailer’s warranty for eligible items purchased with your MasterCard debit card.
Sable guarantees that you won’t be held liable if unauthorized purchases show up on your cards. The company will also cover the cost of most purchases within 60 days if you’re unsatisfied with something you bought and the seller won’t accept the return. There are also no annual fees, no minimum account balances, or deposits required, and there are no domestic ATM withdrawal fees (third-party fees apply).
With Sable checking, you can send money internationally to over 55 countries, and they will price match the transfer rate of any competitor. (source) Although Sable does not charge a foreign transaction fee or foreign ATM fee, they do pass on a fee of 2% charged by MasterCard to the consumer. (source)
SoFi is an online banking service offering a wide range of financial services in one location. With over four million members, SoFi is dedicated to providing quality banking products with customers in mind.
SoFi offers a checking rewards debit card account with a high APY accrual. You can get up to 15% cashback on qualifying purchases from select merchants. There are no account fees and you can get paid up to two days early on direct deposits.
Although this bank has no brick-and-mortar establishments, there are over 55,000 fee-free ATMs where you withdraw your money within the Allpoint Network.
Another nice feature of this online bank account is the no-fee overdraft coverage of up to $50 on debit card purchases. This feature takes effect when you have minimum direct deposits totaling $1,000 each month. (source)
Current is a little bit different than a typical financial institution. This business classifies itself as a financial technology company. It was founded on the belief that banking should be accessible and affordable for everyone. Current provides a variety of products with their customers in mind.
Spend and save accounts
There are no hidden fees, monthly fees, minimum balance fees, bank transfer fees, in-network ATM withdrawal fees, or overdraft fees up to $200 if certain account conditions are met. Another great feature of this company is that they offer high-yield dividends when you put money aside into Current “Savings Pods.” (Savings Pods are basically just another name for a basic savings account.)
Like many other streamlined online banks, you can get paid earlier with faster direct deposits — up to two days sooner than traditional institutions.
Current also offers features that are great for teens that desire some financial freedom, while offering the visibility and security parents want. You can transfer money directly to your teen’s account so they can access it instantly. Parents can also block merchants, set spending limits, get notifications about their teen’s spending, assign chores to complete, automate allowance payments, and lock/unlock the card from the mobile app if lost or stolen. (source)
Navy Federal Credit Union
If you’re looking for credit unions that offer nationwide banking, Navy Federal Credit Union is a great option. With 350 branches — some of which are international — this credit union is one of the most accessible credit unions in the nation. (source)
Included in all Navy Federal checking accounts
There are many features included in all Navy Federal checking accounts. One example is no monthly checking account fees or service fees. However, the one exception to this is the flagship checking account, which requires an average daily balance of $1,500 or more to waive the $10 service fee.
Additionally, all checking accounts accrue monthly dividends. Some account types offer higher APY, such as the flagship checking account offering 0.35% to 0.45% APY, whereas the free everyday checking account only offers 0.01% APY. Remember that these rates are variable and subject to change after the account is opened.
You will have access to digital banking with mobile deposits, online bill pay, and online checking protection options. Also included are free traditional name-only checks that are customizable. (source)
Navy Federal checking account overdraft protection services
All Navy Federal checking account holders are offered three types of checking account overdraft protection coverage: Overdraft Savings Transfer, Checking Line of Credit, and Optional Overdraft Protection Service. (source)
- Overdraft Savings Transfer. This protection takes effect when your checking account is overdrawn. If you have sufficient funds in your Navy Federal savings to cover the overdraft, money will automatically be moved from your linked savings to your checking.
- Checking Line of Credit. Opting for this coverage protects your checking account from large or unexpected expenses. This option is used to cover insufficient funds before an overdraft savings transfer is used. Checking Line of Credit is a credit product and is subject to credit approval. Generally, credit limits are $500. Criteria such as length of membership, direct deposit, and active duty status may be considered in addition to creditworthiness for higher credit limits. These limits can extend up to $5,000 for active duty service members and $3,000 for members not in active duty military service.
- Optional Overdraft Protection Service (OOPS). This protection covers overdrafts from checks, ATM withdrawals, automated clearing house transactions (including automatic bill payments), and debit card transactions. There is a $20 fee for each overdraft, but a maximum of one overdraft fee is charged per day. Total overdrafts are limited to $500, plus fees. There is no credit approval required for this service, and you have 30 days to bring the account back to a positive balance. OOPS will automatically be in effect after opting into the service online. Remember that if you have money in one of your linked savings accounts, the funds will be transferred from your savings first, rather than covered by OOPS. (source)
With more than 180 years of experience and over 200 full-service in-person banking locations, United Bank is a great option for a traditional nationwide bank. (source)
United Free checking
With United free checking there is no monthly service charge and no minimum balance required. You get a free Visa debit card when opening an account with 24/7 fraud monitoring and Zero Liability on fraudulent purchases. Any potential fraudulent charges are quickly reported to you and resolved.
United Bank also can be used as an online bank if that suits your needs a little better. This feature makes it easy to move money and pay bills in just a couple of clicks. (source)
FSNB (formerly Fort Sill National Bank)
FSNB can be found in 178 locations in the following nine states: Oklahoma, Texas, Georgia, North Carolina, Tennessee, Delaware, Louisiana, Mississippi, and Arkansas.
FSNB basic checking
The FSNB basic checking account is a bare essential checking account with unlimited check writing. This account also has no monthly fees as long as your balance stays above $100 and you sign up for e-statements. You can also accrue interest on funds if your balance stays above $500.
Account holders can take advantage of optional overdraft protection. If you overdraft your account, you will be protected based on a varying overdraft limit with a $20 fee. (source)
First National Bank Texas
First National Bank Texas (also called First Convenience Bank) offers a wide variety of checking account options from a standard checking account to a high-yield checking account. Let’s take a look at their flagship account called Power Checking.
First National Bank Texas Power Checking has no minimum deposit needed to open the account. They will also waive the monthly fee if you maintain a balance of $100 or more, have a monthly direct deposit of $100 or more, or have at least eight debit card purchases on your monthly statement. Otherwise, the monthly maintenance fee is $12 a month.
You do get overdraft protection with this account type. However, keep in mind that unless you applied for the fee-free account transfer overdraft protection, there’s a minimum fee of $34. Of course, this depends on the transaction type and dollar amount overdrawn. You also can only apply for this overdraft protection if there are sufficient funds available in the “transfer from” account. (source)
A historic merger of equals in 2019 — SunTrust Bank and BB&T — formed what is now known as Truist bank. This combination of previous competitors has led to the formation of a more convenient and accessible national bank.
Truist One checking
With the Truist One checking account, there are no overdraft fees, no monthly maintenance fees (under certain conditions), and a $100 negative balance buffer. Another great feature of this checking account is 10% to 50% more cashback or mile rewards earned when used in tandem with select Truist credit cards.
Keep in mind that there’s a minimum opening deposit of $50. The more money you have in this account, the more you can take advantage of benefits based on tiered rewards. (source)
Green Dot created a flagship digital banking company and named it Go2Bank. If you’re looking for a basic mobile banking account with no monthly fees and $200 of overdraft protection, this could be the right option for you. However, if you don’t meet the direct deposit requirements, you’ll be responsible for a $5 per month fee.
One nice feature of this online checking account is the ability to lock and unlock your card if misplaced or stolen. You will also get fraud alerts via text message and a chip-enabled card for extra protection.
Opening an account is free, but there is a one-time fee of $2.95 to purchase the Go2Bank debit card at a retail store. You’ll also have to pay an initial deposit of $20 to $500. (source)
Regions Bank is a member of the S&P 500 index and one of the nation’s largest full-service providers of consumer and commercial banking, wealth management, and mortgage products and services. Regions has in-person branch locations across southern and midwestern states, as well as Texas.
Regions Now Checking
Regions Now Checking comes with no overdraft fees, unlimited check writing, and access to online bill pay. You can also earn rewards through the Regions Cashback Rewards program when you use your Regions Visa check card.
This account also doesn’t charge customers an ATM fee for two ATM transactions at non-Regions ATMs per statement period. That being said, that’s only if you provide your Military ID when opening a Regions checking account or any time afterward. Another downside to this account is the nonwaivable monthly service fee of $5. (source)
With 2,600 branches and 19,000 ATMs, PNC is a widely available national bank that offers a broad range of banking products to help meet your financial goals.
PNC Virtual Wallet
PNC is offering up to $400 when you open and use a select new Virtual Wallet product if you meet certain criteria. (while promotion lasts) This could be a great boost to your new account.
With the basic Virtual Wallet product, there are no monthly service fees (under certain conditions) and you can get reimbursed your first two PNC fees at domestic or international non-PNC ATMs. In addition to those benefits, you may also be reimbursed up to $5 for other banks’ ATM surcharge fees. (source)
U.S. Bank is a nationwide bank that was established when the Lincoln administration signed its national bank charter in 1863. This bank has stood the test of time and offers several standard checking accounts that could fit your needs.
U.S. Bank Easy Checking
U.S. Bank Easy Checking comes with overdraft protection. If your available balance at the end of the day is overdrawn by $50 or less, you will not be charged an overdraft fee. If your available balance is overdrawn by $50.01 or more, you’re given extra time to potentially waive overdraft fees on eligible accounts with overdraft fee forgiveness.
Easy Checking comes with a $6.95 monthly service fee. These fees can be waived if one of the following criteria are met: (source)
- You have combined monthly direct deposits totaling $1,000 or more.
- You’ve kept your account at an average balance of $1,500.
- You are age 65 or older.
How do I create an online checking account?
For most of the online-only banks in our list above, if you are at least 18 years old, the application process is fairly simple. The bank will need basic information such as your name, date of birth, address, and Social Security information. Keep in mind that some banks may require a minimum deposit to open an account.
Does ChexSystems affect credit reports?
Although similar to credit reporting agencies like Equifax, Experian, and TransUnion, ChexSystems records do not affect credit reports. These files also don’t change your credit score and won’t factor into a bank’s decisions to extend credit.
The account screening done by ChexSystems is made available to financial institutions so that they can verify how well you can manage a bank account. This is different from your creditworthiness, which is what the above agencies monitor.
What if you have been a victim of fraud?
If you find information in your consumer report that you think is inaccurate, you have the legal right to dispute the content with the reporting agency and the company that shared the information. Legally, companies must conduct an investigation free of charge.
If I pay what is owed on an outstanding account, will the information be removed from my ChexSystems report?
The source that informed ChexSystems of account mishandling is under no obligation to remove an accurate report, even after monies owed are paid in full. However, if the outstanding balance was paid or settled, the source is obligated to update your ChexSystems report with a paid-in-full or settled-in-full status.
When an account status update is sent to ChexSystems from the original source of the recorded information, the ChexSystems report is then updated. That being said, the original record of the mishandling remains on file.
Does the Fair Credit Reporting Act affect my ability to open a bank account?
The Fair Credit Reporting Act (FCRA) is a federal law that helps to ensure the accuracy, fairness, and privacy of the information in consumer credit bureau files. The law regulates the way credit reporting agencies can collect, access, use, and share the data they collect in your consumer reports.
Because ChexSystems is a consumer-reporting agency governed by the FCRA, your ability to open a bank account can be affected by the FCRA. But since financial institutions are not required to check your banking history with ChexSystems, the FCRA will not directly impact your ability to open a bank account if you pick one that does not use ChexSystems.
Will a secured credit card help me build my bank trustworthiness?
A secured credit card is a credit card that is funded by a cash deposit, and serves as collateral if the cardholder were to default on their payments. Outside of the deposit, a secured credit card functions as a normal credit card.
Although secured credit cards are good for establishing credit, or rebuilding credit, secured credit cards are not a sure means to build a good rapport with banks.
ChexSystems uses its own number ranking system, a system completely different from companies checking your credit score. Merely having and using a secured credit card won’t build a positive ChexSystems report.
- ChexSystems is a consumer reporting agency that collects data pertaining to banking trustworthiness.
- If you have negative banking history on your ChexSystems report, you may be denied an account from a bank that uses ChexSystems.
- Not all banks use ChexSystems to check your banking history.
- Banks and credit unions that don’t use ChexSystems are also called second-chance banking.
- Contrary to popular belief, there are great second-chance bank accounts available to those who have poor banking history with ChexSystems.
View Article Sources
- Account Screening Consumer Reporting Agencies — National Consumer Law Center
- National Rates and Rate Caps — Federal Deposit Insurance Corporation
- How to Open a Checking Account — SuperMoney
- What Are The Benefits Of A Checking Account? — SuperMoney
- How To Close A Chase Checking Account — SuperMoney
- Which Banks Offer Second Chance Checking Accounts? — SuperMoney
- Can Opening or Closing Your Bank Account Hurt Your Credit? — SuperMoney
- Do I Have To Pay Taxes On My Checking Account? — SuperMoney
- How Many Checking Accounts Can You Have? — SuperMoney
- Banking Guide — SuperMoney
- Best Checking Accounts — SuperMoney