ChexSystems is a consumer reporting agency that collects info about your banking history to create a “big picture” assessment of past banking activity. These reports cover assets like checking accounts and savings accounts, looking at whether you’ve had any “oops” moments like bouncing a check or closing an account with a negative balance.
In many ways, ChexSystems is similar to a credit bureau, except they’re tracking banking health instead of credit use. Banks use ChexSystems reports to gauge what decisions you might make as a customer. When you’re applying for a new account with a bank, the institution will generally run a ChexSystems report first.
That, combined with other details gleaned from your application, will help the bank make a decision as to whether or not you can open an account with them.
The ChexSystems process involves a deep dive into your past banking activity. This includes looking for red flags, such as:
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Bounced checks
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Overdrafts
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Involuntary account closures
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Too many recent account applications
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Negative balances still unpaid
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Account abuse
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Abuse of ATMs/debit cards
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Identity theft
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Fraud
All these factors go into creating the ChexSystems risk score, which ranges from 100 to 899. The lower the score, the higher the risk (at least in ChexSystems’ eyes).
The thing to remember about ChexSystems reports is that it’s just a report, not a decision. Banks are left to interpret the information on their own, and what results in a nay from one institution could be a pass from another.
Some banks are more willing to take a risk. Others may decide even a few suspect transactions are grounds for rejection.
This link provides more details
https://www.varomoney.com/money-101/banking/what-is-chexsystems/
