Turned down for a checking account

Being refused a basic checking account is disorienting, and the reason is rarely your credit report.

Check-writing history is its own file

15 U.S.C. § 1681a(x) lists “(3) check writing history” among the categories that make an agency a nationwide specialty consumer reporting agency.

Banks consult those files when opening deposit accounts. What is typically in them: accounts closed by a bank for cause, unpaid negative balances, overdraft and returned-item history, and suspected fraud indicators.

Which is why a person with unblemished credit can be declined. The bank was not looking at credit.

Why entries persist

The characteristic problem is that an entry can outlast the situation that created it.

An account closed with a negative balance years ago, since paid, may still be reported. A closure recorded as “for cause” following a dispute with a bank may reflect the bank’s characterization rather than what happened. An account closed after fraud committed against you can be recorded in a way that makes you look like the problem.

And banks decline on these files fairly mechanically, so a single old entry can shut you out of ordinary banking for years — which has consequences well beyond convenience.

Your rights are the ordinary ones

A check-writing history agency is a consumer reporting agency. All of it applies:

An adverse action notice. Under § 1681m(a), a bank declining you based on a consumer report must give notice identifying the agency that furnished it, state that the agency did not make the decision, and tell you about your right to a free copy and to dispute. That notice is how you learn which file to request.

A free report after adverse action within 60 days, under § 1681j(b) — and a free annual report under § 1681j(a)(1)(A), which reaches the specialty agencies. Section 1681j(a)(1)(C) requires each to maintain a streamlined request process with a toll-free number.

The full reinvestigation machinery under § 1681i — the reinvestigation period, notice to the furnisher within five business days, the duty to review and consider what you submit, and a written result.

The furnisher duties under § 1681s-2(b), triggered by disputing to the agency rather than to the bank. See disputing with the bureau, the furnisher, or both.

What to do

1. Ask the bank which agency it used, and get the adverse action notice.
2. Request the report from that agency — free after adverse action within 60 days.
3. Read every entry against what you know: which bank, which account, what date, what amount, what the stated reason for closure was.
4. Gather documentation. A payoff letter, a bank statement showing a zero balance, correspondence about a disputed charge, a fraud report.
5. Dispute in writing to the agency, with copies. Be specific: this entry reports X; the account was resolved on [date]; documentation enclosed.
6. Also write the bank that furnished it. A furnisher that determines information it supplied is incomplete or inaccurate must under § 1681s-2(a)(2) notify the agency and correct it.
7. Keep everything. See building a record that holds up.

Two practical notes

Paying does not automatically remove it. Paying a negative balance usually changes the entry to reflect payment rather than deleting it. That may or may not change a bank’s decision, and it does not make an inaccurate entry accurate.

Some banks offer accounts that do not screen this way. That is a banking question rather than a credit reporting one, but it is worth asking about while a dispute runs, because being unbanked has costs that accumulate quickly.

The general point

There are more files about you than the three you have heard of, each owes you a free copy every twelve months, and the dispute rights are identical. See the other credit bureaus nobody checks.

If you have ever had an account closed by a bank — for any reason, including reasons that were not your fault — checking that file before you next need an account is worth an hour.

We do not tell you whether anything in your file is accurate or what any bank may lawfully do. What is general is which file was consulted, that you can see it, and that it is disputable.