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Consequences of Mishandling a Checking Account

It is important to be responsible with your checking account in order to maintain a good debit history. Your debit history contains facts about you and your deposit or checking account history, similar to a credit report. It is made available, as permitted by law, to your current and prospective financial institutions to assess your likelihood of managing your debit accounts responsibly. Debit history may also be used by creditors. Your debit history can include such items as:

-  Any checking account closures you may have had

-  Any returned (bounced) check that retailers have reported about you

-  How many financial institution inquiries have been made about you and in
    what time frames

-  How many check orders you have placed and how often

If you do not maintain a good debit history, there are unpleasant consequences, such as:

-  Your financial institution could charge you fees for each overdraft

-  The place you wrote the check could also charge you a fee or refuse to take any more
    checks from you

-  You could receive calls and letters asking you to repay the money

-  Your name and account information could be reported to a check verification service,
    which could cause your checks to be declined at point of sale

-  Your bank could close your checking account

-  Your bank could report your closed account to ChexSystems.  As a result, other banks
    could refuse to open a checking account for you

ChexSystems is a consumer-reporting agency (governed by the federal Fair Credit Reporting Act (FCRA) and other laws) that compiles information on mishandled checking or savings account as reported by member banks and credit unions. ChexSystems shares this information among member institutions to help them assess the risk of opening new accounts but does not decide on new account openings.  You are entitled to one free copy of your ChexSystems report every twelve months.

Each report submitted to ChexSystems remains on file for five years, unless the reporting member requests its removal or ChexSystems becomes obligated to remove it under applicable law.  Paying money owed does not remove an accurate report of account mishandling.  However, institution is obligated to update the report with a paid in full or settled in full date when applicable. 

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