A number of online banks, local banks and credit unions do not use the ChexSystems reporting service for verifying new bank accounts. Online banks that do not use ChexSystems include Clarity Bank and Skylight Bank. Other banks still refer to ChexSystems reports, but may use other resources such as credit reports to help determine if they will permit new customers to open an account.
ChexSystems is an agency that records incidents of what it terms mishandling of bank accounts reported to the agency by banks and credit unions. Incidents that may be reported to ChexSystems include bank accounts closed for cause by the issuing bank, multiple overdrafts within the same account and fraud. Incidents stay on an individual's ChexSystem report for up to five years. Individuals with negative ChexSystems reports often find it difficult to open new bank accounts with banks that consult ChexSystems to verify new customers. However, some consumers believe that ChexSystems may keep incidents on an individual's report even if those incidents were errors or were resolved amicably with the bank that reported the incident.
While it is estimated that approximately 80 percent of financial institutions consult ChexSystems reports when opening a new account, it is more common for smaller regional banks and credit unions to not use the ChexSystems service than for large national banks not to. In addition, many debit card providers and other services that support Direct Deposit do not verify new account information with ChexSystems. These services can offer an alternative to traditional banking for consumers with a negative ChexSystems report.