Question

Brendan has a history of mismanaging his checking account. If he tries to open an account at a new bank or credit union, how can the prospective bank or credit union evaluate his previous bank account history?

1. Request a credit report from a credit bureau.
2. Conduct a background check on Brendan's banking history.
3. Obtain a reference from Brendan's previous bank.
4. ChexSystems.

Answer 1

Banks can evaluate Brendan's checking account history using ChexSystems, which provides a report specifically on banking behavior, unlike a general credit report that focuses on borrowing history.

Step-by-step explanation:

If Brendan has a history of mismanaging his checking account and attempts to open a new account at a different bank or credit union, the prospective financial institution can evaluate his previous account history in a few ways. Although a credit report from a credit bureau may provide details on his borrowing history, it usually does not include his checking account management. The most common method banks use to assess risk for new checking accounts is through a service like ChexSystems, which is specifically designed to report on banking history such as account mismanagement, overdrafts, and unpaid fees. While banks can also obtain a reference from Brendan's previous bank or conduct a background check, ChexSystems provides a more standardized and widely accepted evaluation of an individual's banking behavior.