Most people have no idea that under the U.S. law’s definition, there are technically 6 credit bureaus that track consumers’ financial exploits. The lesser-known of the bunch – ChexSystems, Telecheck, and EWS – are reporting agencies that provide info to financial institutions when consumers apply for new accounts.
If you’ve ever walked away from a bank – that is, if you’ve ever overdrawn an account and closed it – it’s likely that your activity is logged in one of these three agencies’ files. Unless you know to check your reports with these agencies regularly, you won’t discover your record unless you have trouble opening a new bank account.
ChexSystems is arguably the most notorious of these three covert credit agencies. The company furnishes financial institutions with “account verification services” to alert them of applicants with a prior history of mishandling their bank accounts. And by “mishandling,” I mean overdrawing their accounts.
Here’s where the notorious part comes in. Simply type “how to get off ChexSystems” in Google and you’ll be showered with ads, courses, and books offering to help consumers through the removal process. It’s big business for a reason: ChexSystems is legendary for forcing consumers to jump through hoops in order to get their records corrected.
Good news: since ChexSystems is indeed a consumer-reporting agency, it means the federal Fair Credit Reporting Act (FCRA) governs the company’s handling of consumer records. Head on over to the Federal Trade Commission for more information about your rights under the law, and get a copy of your ChexSystems record (if you find out you have one) here.
You probably won’t bump into your TeleCheck record unless you have trouble using or cashing a check, but a handful of banks use the system to verify new applicants for accounts as well. TeleCheck claims to “protect you” by reducing check fraud, but the reality is that the agency works hardest to protect its paying customers – the lending institutions themselves.
In a nutshell, TeleCheck is a check verification company, but it’s also a credit reporting agency. Financial institutions and merchants pay fees to subscribe to the company’s reporting service. For their money, TeleCheck guarantees all of the checks the institutions accept.
So, you’ll be on record for writing bad checks, which is understandable, but that’s not all. Banks have the ability to report closed (or otherwise compromised) checking accounts to the agency as well. Make sure you’re not in the TeleCheck system by requesting your report here.
Early Warning Systems (EWS) is the new kid on the block. It’s a credit reporting agency, but guess who formed it? None other than JPMorgan Chase, Wachovia, Bank of America, Wells Fargo, and BB&T Corporation.
Early Warning Systems hooks up banks with info about applicants or new customers who “may be a risk.” Translation: an EWS record is the kiss of death if you want to open a new checking or savings account with a bank that uses it. You make the list if you’ve overdrafted an account or bounced checks in the past and the institution reported it to EWS. Visit here to get your report.
Don’t let these three agencies wreck your relationship with a new bank before it even begins. Check things out now, and don’t forget to pull your regular credit reports annually as well.