ChexSystems is a financial database used by some, but not all, banks and credit unions to determine if a potential customer presents too much risk. It is regulated by the Fair Credit Reporting System. If a person has a history of certain issues—such as overdrafts or bouncing checks—or if an account was closed for a negative balance, he or she might be reported to ChexSystems. Information such as this can stay on a ChexSystems record for a period of five years.
Many banks will not accept people with poor ChexSystem records. Other banks will place certain requirements on an account, such as paying off the balance owed to another bank or higher fees associated with the account. For that reason, people who have a poor financial history may want to open up a bank account at a credit union that does not use ChexSystems.
These accounts are often known as “second chance checking accounts.” They are marketed to people who have been turned down for checking accountsdue to past mistakes. These accounts tend to have higher monthly fees and may require consumers to set up direct deposits or complete a money management course.
Some credit unions do not use ChexSystems. For people interested in second chance checking accounts, the following credit unions might be worth a look. You may also be interested in banks that don’t use ChexSystems.
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Motor City Co-Op Credit Union
Instead of ChexSystems, Motor City Co-Op Credit Union (MCCU) uses TeleCheck to open new accounts. There are no monthly service fees for checking accounts and no minimum balance requirements. MCCU also does not charge for each check used. Funds can be accessed through ATMs, debit cards, online and app platforms, and an audio-teller, in addition to local branches. Membership in the credit union is required to open an account. You must be a Michigan resident in order to obtain membership.
North Georgia Credit Union
North Georgia Credit Union (NGCU) checking accounts do not require a minimum balance and do not charge a monthly or per-check fee. Each checking account comes with a free Visa debit card, as well as free home banking and bill pay if e-statements are chosen. In addition, overdraft protection is provided with a pre-approved line of credit. Direct deposit and payroll deduction are also available. Membership in the credit union is required to open a checking account. You must live or work in Stephens, Franklin, Hart, or Rabun counties in order to qualify for membership. Alternatively, you may be able to qualify if you or someone in your immediate family is employed by a qualifying employer.
Midland Credit Union
Instead of ChexSystems, Midland Credit Union (MCU) uses a credit report to determine eligibility for its checking accounts. There are no monthly service fees on active personal accounts, and the credit union pays dividends on accounts with average daily balances over $500. In addition, Visa check cards are available for checking accounts. Membership is required in order to open up a checking account at this credit union. Membership is available for individuals who live or work in Iowa in Polk County and nearby counties including Story, Jasper, Marion, Warren, Madison, Dallas, and Boone.
Federal Employees West Federal Credit Union
Federal Employees West Federal Credit Union (FEWFCU) does not use ChexSystems to establish eligibility for its checking accounts. Instead, it relies on TeleCheck. In addition, customers must have a savings account to become members of the credit union, which is a prerequisite to having a checking account. There is no minimum balance required for checking accounts, and the $5 monthly fee is waived if an account holder signs up for e-statements, uses direct deposits, maintains a combined balance of $250 across accounts, or is under the age of 18 or over the age of 65. Accounts with a balance of over $250 can earn interest. There are over 50,000 free ATMs worldwide, and account holders have unlimited ATM transactions. FEWFCU’s field of membership spans the following Southern California locations: Los Angeles, Orange, Riverside, San Bernardino, Ventura, Santa Barbara, and San Luis Obispo.
First Service Credit Union
Based in Houston, Texas, First Service Credit Union (FSCU) offers second chance checking accounts without the use of ChexSystems. These accounts carry a monthly service charge of $9 and allow for unlimited transactions. They come with a free debit card, free online banking and bill pay, and free e-statements. After six months, members with no overdrafts and continuous direct deposits may be reviewed and converted to a standard checking account. Membership is required for a checking account. You are eligible for membership if you live, work, or worship in Harris County, Waller County, Fort Bend County, or if you work for a qualifying employer in the area.
Cardinal Community Credit Union
Near Cleveland, Ohio, Cardinal Community Credit Union (CCCU) offers second chance checking accounts. CCCU does not use ChexSystems. Their checking accounts charge a $8.95 monthly fee. There is no minimum balance required for the account, and it comes with a free debit card and free online banking and e-statements. Direct deposit is required for this type of account. No checks are issued for this account, but users are permitted free ATM transactions at Cardinal-owned ATMs, and five free transactions at all other ATMs per month. In addition, users can conduct 10 bill-pay transactions per month; additional transactions cost 50 cents each. Membership is required to obtain a checking account. Members must live, work, or worship in Lake, Cuyahoga, Geauga, Ashtabula, Portage, Summit, Mahoning, Trumbull, or Columbiana counties.
Alliance Credit Union
Alliance Credit Union (ACU) has a second chance checking program that requires a $10 monthly fee. The minimum opening deposit is $50, and there is no minimum balance that must be maintained. These accounts offer no interest. In-network ATM visits are free and unlimited, while visits to out-of-network ATMs cost $2 each after the first four. Online and mobile banking transactions are free. Membership in the credit union is required to open an account. To qualify for membership individuals must live, work, or worship in Santa Clara, San Mateo, Alameda, New Hanover, Brunswick, or Pender counties. Alternatively, members may qualify through partnered employers.
While having a report in ChexSystems can complicate your ability to obtain a checking account, it is far from impossible. By joining a credit union, you may be able to avoid the ChexSystems database entirely—and work to re-establish your good status in the banking world.