If you are looking to secure a loan such as a mortgage from your bank or even begin a new checking account you can be certain that your credit scores will be checked and thoroughly reviewed. Your credit score will indicate to the bank the amount of risk you bring to their company. Think of your credit profile as your character reference in regards to how you manage your money and debts.
There are three main credit reporting bureaus your bank might use when checking your credit history. These include Equifax, TransUnion, and Experian. The Patriot Act requires that all banks verify the identities of individuals who apply to become new customers. Known as the customer identification program (CIP), banks must check your name, address, birthdate, and other information pertaining to your identity. This verification process is considered a soft credit check if anything at all and will not negatively affect your credit score.
One of the more common ways that banks assess your credit history is through ChexSystems, an verification system used for keeping track of consumers who don’t appropriately use their deposit accounts. The information gathered by ChexSystems typically covers a time period of five years and is used to help banks protect themselves against high risk customers. If your banking institution uses ChexSystem, they can determine if you have overdrawn any account in the past five years, have indications of fraud associated with any of your accounts, or have attempted to manipulate a savings account.
Not all banking institutions use the same reporting agencies, and not all count as hard credit checks – those checks that can negatively affect your credit score.
Protecting Your Banking Options
There are several steps you can take to ensure that when a bank runs a credit check on you that the report is as positive as possible.
• If you are looking to establish a new relationship with a new bank, begin by first checking your own credit history. Not only can you request, for free each year, your credit report from one of the three main reporting bureaus, but you can also request a free report from ChexSystems. This is an important step because this is the report that many banks are likely to use when opening new accounts.
• If you find any discrepancies in the report, contact ChexSystems as well as the institutions that have false or misleading claims against you.
• If there are outstanding claims against any prior accounts, once you reconcile these the banks have to register them as “paid” on your report.