Rebuilding credit: Scarlet 'C' of ChexSystems

Ever get that feeling that you've got a large piece of spinach stuck between your teeth? Or that your fly is unzipped and you're totally exposed? You know the look you get when there's something wrong and you can't quite determine what it is?

That's exactly how it was with me.

Imagine this. I am finally beginning to get my feet back on the ground and my head screwed on straight after filing bankruptcy. My confidence is just beginning to return as I take the first step toward financial responsibility and rebuilding credit. I walked into our neighborhood bank, ready to open a new checking account - carrying the small percentage of my income that I have earmarked to begin a savings account.

After turning over the application to the “personal banker,” I sat down to wait, only to have her return with a look that made me glance down to see if I had a large scarlet letter sewn to my chest. Come to find out - I did!

Prior to bankruptcy, during that terrible time when I wrote checks just to appease creditors rather than my checkbook, my banks weren't so pleased and closed my accounts. Now I was branded with a flaming “C” on my record.

“C” doesn't stand for financially “crashed,” or even “cruddy credit” but for “ChexSystems.” It's sort of like the 'Big Brother' in money matters…a company that constantly watches and tracks your banking behavior. If you've written several bad checks, or if you've had accounts closed for nonpayment, ChexSystems knows all and makes note of it, sharing that information with the financial world. The system not only looks at the bad check(s), but at the amount of time it took you to “make good” on the “bounce.”

I walked away that day, embarrassed and humiliated, desperately fighting back that doomed feeling I had conquered with the discharge of my previous debts.

A little research, and a few years later, and I can tell you absolutely, that you can overcome the “Scarlet C.”

First, know that before you attempt to open a bank account, you should check your rating. Go to www.chexhelp.com. The report costs $8.00, but is well worth it to know where you stand with 'Big Brother.'

Then, if you find that you have a negative rating, understand that life WILL go on and that “this too shall pass.” If you have no more problems, your name will go off ChexSystems in five years.

Now, don't despair. Just because your name is in the System for five years, doesn't mean you won't be able to open a bank account. But, before you run down to the nearest branch, call around to different banks and ask what their policy is with regard to opening accounts for someone on ChexSystems. Some banks will let you open an account provided that all debts have been paid. Other institutions will not allow any accounts whatsoever until the five years have elapsed, and some places will open accounts if the problem indicated on “Chex” was more than two years ago.

Maybe you're less naive than I was. I had mistakenly assumed that with the discharge of my previous debts, and my new awareness of the importance of carefully planned financial decisions, that all my problems were in the past. But I didn't know about ChexSystems or that even though debts are discharged - my negative banking record wasn't erased. (There is no law requiring the removal of accurate, factual information from my name in the system.)

If you'd like to dispute the information on your ChexSystems account you can. You can file a written statement which will be added to your file. Keep in mind, however, that ChexSystems simply passes on information to the bank. They don't decide whether or not you can have an account. That's totally up to the bank.

Of course, you can overcome a bad history by careful management and planning, and eventually that bank employee won't have that “oh-my-goodness-you-have-the-plague” look when she talks to you. Instead, she'll be smiling, welcoming, and pleased to have you walk in the door when rebuilding credit. That “C” once emblazoned on your chest will now only remind her of “Customer.”

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