Banking history could keep you from opening account

September 19, 2013 8:30:08 PM PDT
You've heard of credit reporting agencies, but did you know there are companies tracking your banking history and any money mistakes you make? So how could this affect you and the bank you choose to do business with?

This is how Natasha Carmon pays her bills. She drives to each business, goes inside and settles up with cash, or purchases a money order.

"It's definitely frustrating," Carmon said.

Frustrating because she'd rather pay by check, but she can't.

"They all denied me and they all said that it's because you owe this bank X amount of dollars," Carmon said.

She says four years ago, she got hit with a bank fee, and when she couldn't pay, the charges piled up and her account was closed.

"The fees just got so extreme that I couldn't keep that up," Carmon said.

Unpaid fees, involuntary account closures and bounced checks are just some money mistakes banks and credit unions may report to two different tracking companies, Chex Systems and Early Warning.

"It's a good indication of whether the person can manage the account and what risk they present of causing the bank to lose money," said Nessa Feddis with the American Bankers Association.

This FDIC survey reveals 65 percent of banks deny checking account applicants who have prior mismanagement in their consumer reports.

"A consumer who bounced a check once is not a deadbeat. A consumer who bounced a check once may not even have made a conscious mistake," said Ed Mierzwinski with U.S. PIRG.

Federal law says you can request a free banking history report each year and dispute any inaccuracies.

As for Carmon, she says she's going to have to keep hitting the road to pay her bills, at least for now.

The American Bankers Association says if you have an overdraft fee and you take care of it, chances are you're not going to be reported to anyone. But if you don't take care of it, problems can arise.

The Consumer Financial Protection Bureau regulates these reporting practices.

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