When you go to apply for a new loan or line of credit, many times consumers will become nervous and “sit on the edge” of their seats waiting for the results. With all of us wanting the best rate possible with the best terms and payment amount, a lot is riding on the running of your credit score during the loan application process.
Much like when you apply for a loan, when you open a new checking or savings account, your credit union (or bank) is doing a background check on past accounts to spot any fraud. If you’ve never heard of a company called ChexSystems before, that’s a good thing. ChexSystems is a consumer reporting company, much like the national credit bureaus of TransUnion, Equifax and Experian. However, ChexSystems collects data on misused checking and savings accounts. Many credit unions and banks check it before granting opening a new account for a new member.
If you don’t tend to overdraw accounts or skip out on bank fees, similar to having a high credit score, your ChexSystems file is likely to be pretty thin. Which means you’ll likely have no trouble opening a new bank account whenever you want to.
There are steps you can take with ChexSystems to avoid having to worry about your good banking reputation. Similar to how the credit bureaus operate, you can ensure that identity thieves cannot take advantage of your good banking record. ChexSystems allows you to freeze your file, preventing fraudulent accounts from being opened in your name.
The process for freezing your ChexSystems file is pretty simple.
Freezing your ChexSystems report mainly prohibits ChexSystems from releasing information about you without your consent.
Many credit unions won’t open an account if they can’t check your banking history. So, a freeze makes it more difficult for an identity thief to open a checking or savings account in your name.
It’s important to note that if you do have a negative account history, ChexSystems can still release that information if you try to open a checking account, even with a freeze in place.
Much like when you’re prepared to go shopping for something that would require a new loan or line of credit, and require your credit report to be pulled, you’ll want to ensure your ChexSystems report is not frozen before considering opening a new account.
ChexSystems report freezes are free, and requesting one takes just a few minutes. You can request this through ChexSystems’ website at www.chexsystems.com. When requesting the freeze, you’ll receive an identification number through the mail. Keep the number in a safe place. You will need that identification to make any changes in the future.
Freezing your files doesn’t mean you can forget about identity security — especially if, like many people, your data has already been compromised. Continue to monitor your credit report and credit score, routinely checking to see if any information is being reported that has not been done by you personally.