How to Open a Business Checking Account Online With No ChexSystems

Updated on July 30, 2020
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opening an account with no chexsystems

When deciding to start a small business, most entrepreneurs find themselves quickly overwhelmed by the never-ending list of logistical to-dos.

  • Filing legal paperwork? Done.
  • Setting up accounting systems? Handled.
  • Opening a business checking account? Sounds easy enough…

It’s true that opening a business bank account should be as easy as filling out a simple online form. But if you’re reading this, chances are you’re one of the unlucky few for whom that wasn’t the case. As you probably know, when you apply for a business bank account, the bank in question will run a report to see your history with checkings and savings account. Therefore, if you were denied for a business bank account (or multiple) there’s more than likely an issue with your ChexSystems report. 

So, what are you to do? After all, getting set up with a business bank account is one of the first actions you want to take once you start your business–a crucial step to separating your personal and business finances.

If you’ve had issues getting a business bank account and you’re left researching “open business checking account online no ChexSystems,” you’re not alone. Luckily, we’re here to help. In this guide, we’ll explain how the ChexSystems database is impacting your small business banking options, what steps you can take to clear your name, and finally, your options to open a business checking account online with no ChexSystems report being run. 

What Is ChexSystems?

Before you can figure out how to open a business checking account online with no ChexSystems, it’s important to know exactly what ChexSystems does and how it works.

Until experiencing either a forced checking account closure or a denied application for a new personal or business checking account, most of us live our lives totally unaware that ChexSystems exists. Even so, you likely are aware of another financial reporting system that operates in much the same way: your personal credit report.

Just as credit reporting agencies like Experian, Equifax, and TransUnion gather information from creditors to analyze your creditworthiness as a borrower, ChexSystems performs a similar monitoring function for the use of checking and savings accounts.

Simply put, ChexSystems is a nationwide consumer reporting agency that tracks the misuse of checking and savings accounts within U.S. banks.

Therefore, if you’ve ever opened a bank account of any kind inside the U.S., chances are that you have a record within the ChexSystems database. This being said, ChexSystems only lists negative information about your banking history when reporting to financial institutions. This information may include bounced checks, repeated instances of insufficient funds, failure to pay banking fees, or suspected fraudulent activity.

How ChexSystems Works

According to the National Consumer Law Center, around 80% of banks consider reports from ChexSystems when evaluating applications for new bank accounts.[1] Many of the remaining institutions look to similar consumer reporting agencies such as TeleCheck or Early Warning Systems (EWS) for the same types of information.

The relationship between ChexSystems and individual banking institutions is a mutual one. Banks report relevant consumer banking activity to the agency on an automated basis—and in return, ChexSystems grants access to their reporting database so that these same banks can evaluate new account applications.

Though a wide variety of so-called “account misuse” can lead to a flag on your ChexSystems report, here are some of the most common entries that may limit your future access to a business checking or savings account:

  • Multiple overdrafts or instances of insufficient funds
  • High frequency of bounced checks
  • Delayed payment or unpaid banking fees
  • Accounts opened using false information
  • Abuse by a co-signer on a checking account
  • Depositing fraudulent checks to your account
  • Failure to properly close past checking accounts
  • Writing checks from a closed bank account
  • Attempts at ATM withdrawal from a closed bank account
  • Other violations of banking rules and regulations

When ChexSystems receives notification of these or similar account activities, the information will be reflected on your ChexSystems report for up to five years.

Understanding Your ChexSystems Consumer Score

In addition to listing individual infractions on your ChexSystems report, the agency also calculates a “Consumer Score” on the basis of the reported information. Falling within a range of 100 to 899, this score indicates to banks and credit unions the relative risk of approving a checking account for each consumer.

As with your credit score, you want your consumer score to be as high as possible (ideally above 750) to indicate responsible use of your banking accounts.

You can request access to both your ChexSystems Consumer Score and your full ChexSystems report through the agency’s online request form.

How Does ChexSystems Impact Small Business Banking?

As we mentioned above, ChexSystems is a consumer reporting agency—which may leave you wondering, why would your personal ChexSystems report have any impact at all on your business checking account applications? After all, isn’t your business—as an entity—the one applying for the new account?

Well, yes, and no. The answer here depends on your business’s legal ownership structure—and in turn on your federal tax ID.

To explain:

ChexSystems relies on your social security number for its monitoring and reporting efforts. If your business operates as a sole proprietorship or a single-member LLC, chances are that the federal tax ID number for your business is the same as your social security number. In this case, banks can use this tax ID—and in turn your ChexSystems report—when considering your business checking account application.

However, if your business operates as a partnership or corporation, you likely filed for a separate federal tax ID number, known as an employer identification number (EIN). Because this number isn’t directly tied to your SSN, it likely won’t come up in ChexSystems records when a bank searches the database for your application.

On the other hand, since most banks carry terms and conditions that hold business owners personally liable for their business’s finances, you may be asked to supply your SSN in addition to the federal tax ID on your business checking account application.

Therefore, as you can see, the impact of ChexSystems on business banking can be complicated, and small business owners tend to have mixed experiences. For the most part, though, your best bet is to assume that your ChexSystems report will be reviewed as part of any new account application. Although not all banks use ChexSystems to review your bank account history, many do, and those that don’t, more than likely consult a similar reporting agency.

Opening a Business Checking Account Online With No ChexSystems

This being said, now that you have a better understanding of how ChexSystems works and its impact on your business banking choices, let’s discuss what you can do if you have problems due to your ChexSystems report. Is it even possible to open a business checking account online, no ChexSystems report involved?

Essentially, you have two options—you can either get your ChexSystems record cleared or work with a bank that will overlook your ChexSystems report.

If you’re in a hurry to open a business checking account, the second of these options will be your fastest way to go. This being said, however, most business owners would benefit from following a combination of these two approaches.

Let’s take a look at these options in detail to help you open your business checking account online—no ChexSystems drama required.

1. Take Steps to Clear Your ChexSystems Record

No business owner wants to be held back by the looming impact of blemishes on your financial record. For this reason, your first and best course of action when faced with “the ChexSystems blacklist” should be addressing the issue head-on.

Before moving straight to a workaround for your ChexSystems challenges, you can follow these steps to uncover the cause of your ChexSystems challenges and clear your name from the database.

Request Your Full ChexSystems Report

You may have only learned about your ChexSystems record when you were turned down for a business checking account application—and chances are, the bank in question didn’t share details of what they found on your report.

To understand precisely what the bank is seeing, you’ll need to review your full ChexSystems report for yourself. Similar to a personal credit report, your ChexSystems report will show detailed records of past closed accounts, outstanding debts, and bounced checks that may be impacting your current access to open a business checking account online.

You’re legally entitled to obtain a free copy of your report—known as your Consumer Disclosure—once every 12 months. Therefore, you can request your report online through the ChexSystems website and your report will be sent to you via U.S. mail within about five business days.

Submit a Written Dispute for Factual Errors

As with any reporting agency, ChexSystems does occasionally make mistakes regarding users’ banking activity. Mixing up names or social security numbers, misreporting from outside banks, or out-of-date information can potentially cause your account to be flagged by ChexSystems even if you’ve done nothing wrong.

If you review your ChexSystems report and find information that you believe to be inaccurate, you can submit a dispute on the ChexSystems website to have the error corrected. When filing your dispute, be sure to include documentation proving the error—such as past payment records or bank statements—and keep a copy of the submitted dispute for your records.

Once you’ve submitted the claim, ChexSystems and your financial institution are required by federal law to research the dispute and correct any confirmed errors within 30 days.

Pay Off Outstanding Debts

Although inaccuracies on your ChexSystems report are possible, a more likely scenario may be that you have over-drafted accounts, unpaid fees, or outstanding debts that have resulted in a legitimate mark on your report. If this is the case, you’ll want to move forward in a positive direction. To do this, you’ll want to pay off outstanding debts as soon as possible—particularly those that have been sent to a collections agency or are the result of unpaid bank account fees.

If your budget is tight, don’t be afraid to reach out to creditors directly and work to negotiate your claim. In many cases, creditors may agree to accept less than the initially owed amount in order to close the outstanding debt.

Ask Creditors to Update Report Entries

When you’ve addressed the offending entries on your ChexSystems report, most creditors and financial institutions will automatically reference these updates on their next regularly scheduled report to ChexSystems. However, the automated process can take time to be reflected in your ChexSystems report.

To speed up this process, take the time to proactively ask creditors to update your file on the ChexSystems database at the time your payment is made. You can also ask for a written record that your account has been reconciled and submit that documentation directly to ChexSystems through the dispute submission portal. These steps can fast-track the process of clearing your ChexSystems report.

Wait for Your ChexSystems Record to Clear

Once you’ve taken these proactive measures, there’s nothing left to do but wait for your ChexSystems record to be cleared. This process can take as little as a few months or multiple years, depending on the original offense.

Fortunately, although federal regulations permit ChexSystems to maintain records within their database for up to seven years, the agency typically keeps records only for up to five years after the closing of a given bank account.

For some entrepreneurs, however, the “wait and see” approach to clearing your name on the ChexSystems database can result in missed opportunities for your business. If you’re not content to wait out the process, you may be better off working around the ChexSystems issue with our next option below.

2. Apply for an Online Business Checking Account With No ChexSystems

There’s no denying that a negative ChexSystems report will impact your access to most online business checking account options—particularly if that report includes evidence of suspected fraud. This being said, there are a few banks that offer online business checking accounts with no ChexSystems review, or that give only minor consideration to what they may find on your report.

Best Online Business Checking Accounts With No ChexSystems

If ChexSystems has held you back from obtaining an online business checking account, your best bet is going to be trying to work with one of these banks.

BBVA Compass Bank ClearConnect for Business

Known for its so-called “second chance” checking account options, BBVA Compass Bank is known to overlook ChexSystems reports in applications for the Connect for Business account. This BBVA Compass Bank business checking account requires no minimum monthly balance, has no monthly fee, and includes free mobile banking, online banking, and bill pay—making it a great bank account option if you’re just getting started in business. 

It’s important to note, however, that only sole proprietorships can apply for this business checking account with no ChexSystems online. Other business entities can apply for the account, but they’ll have to visit a branch location in order to do so.

Once you’ve opened your account through BBVA Compass Bank, you’ll be able to access the full suite of their online banking services, as well as look into their other small business-centric products.

Chime Second Chance Banking

Another option you have is to work with Chime Bank. Although the Chime Second Chance Bank Account is not a business-specific checking account, Chime can give you access to the bank account you need to separate your business and personal finances.

This being said, with Chime, you can open a business checking account online, no ChexSystems required. You can apply for a Chime account quickly and easily, receiving access to their mobile banking app and debit card. Even better, Chime has no monthly fees, overdraft fees, minimum balance requirements, and no foreign transaction fees.

Local Banks

Finally, depending on your location, you might be able to find a local bank that will allow you to apply for a business checking account online (or in-person) with no ChexSystems report.

For example, Woodforest National Bank offers a Second Chance Business Checking account, specifically designed to accommodate those business owners who have had bank account issues in the past. However, unlike BBVA or Chime, Woodforest requires you to apply for this no credit check business checking account in-person. Luckily, there are over 700 Woodforest branches throughout the U.S.

Similarly, Renasant Bank, United Bank, and 1st Convenience Bank are three other local banks that are said to offer checking account products with no ChexSystems report.

This being said, however, a bank’s application review process can change at any time, so you’ll want to keep in mind that ChexSystems may become a factor for BBVA or any other no ChexSystems bank in the future. Nevertheless, if you need a no credit check business checking account while you try to improve your ChexSystems report, these banks may be worth looking into.

Can You Open a Business Checking Account Online with No ChexSystems?

Receiving news of a denied business checking account application due to a ChexSystems problem is undoubtedly frustrating, and it may even slow down the process of getting your small business’s financial systems up and running—but it doesn’t have to stop your progress completely.

For the most part, only sole proprietors can open a business bank account strictly using an online application. However, the good news is that, in some cases, you can open a business checking account online with no ChexSystems verification, open one with a bank in-person with no ChexSystems report, or even work with a bank willing to overlook flaws on your report. Luckily, whatever the case, once you’ve opened the account, you likely can manage it entirely online. 

At the end of the day, your goal should be to learn from past banking mistakes and improve your financial management skills so that you never again have to worry about ChexSystems. This being said, however, until then, it will simply take some creativity and additional research to access the small business banking options that your new endeavor needs.

Article Sources:

  1. “Account Screening Consumer Report Agencies
Meredith Wood
GM, New Markets at NerdWallet

Meredith Wood

Meredith Wood is the founding editor of the Fundera Ledger and a GM at NerdWallet.

Meredith launched the Fundera Ledger in 2014. She has specialized in financial advice for small business owners for almost a decade. Meredith is frequently sought out for her expertise in small business lending and financial management.

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