If you’ve ever overdrawn your bank account, there’s a decent chance that a company called ChexSystems knows about it. Classified as a consumer credit reporting agency, ChexSystems operates a database that member banks can use to report bounced checks and other activity it classifies as “suspicious.” On the record, ChexSystems is a tool that banks and credit unions can use to “assess the risk of opening new accounts” in the names of chronic check-bouncers; an unofficial list of member banks can be found here.

But the biggest drawback for consumers is that it limits banking options for people who make even one mistake. A ChexSystems history functions as a credit report for your checking account, except it only tracks negative information.

For example, if you have a ChexSystems report and you go to open a new deposit account with a bank that uses the company’s database, the bank can deny you the account on the basis of just one infraction. Even if you’re able to open an account and keep it in good standing, the bank can later close it if a ChexSystems report on you comes up.

Of course, smart consumers stay on top of their finances. The good news is that since ChexSystems is a credit reporting agency, consumers are entitled to one free report per year, which you can obtain online. Do they have incorrect information on you? Dispute the entry by following this link.

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