The past mistakes could be bounced checks, non-sufficient fund fees or overdraft balances. Furthermore, if the friend closed an account without paying the final balance, this will affect your friend negatively when trying to open a new account in the future.

Banks know about the past accounts?

When anyone tries to open a new account, banks and credit unions perform a search of the persons banking history. Similar to a credit check, many banks use a company called Chex Systems Inc. to keep track of a person's banking history, and the bank will access it when needed.

Each report submitted to ChexSystems remains in their files for five years unless the bank or credit union that filed the report requests its removal, which is usually only done if the report was made because of bank error.

How can your friend dispute the report?

If your friend's ChexSystems report is incorrect, they can dispute it. But, be aware, that if your friend paid the outstanding balance to his previous bank, the debt will still remain on their report. It will just be marked as paid, but will not be removed even after a dispute. The dispute is only taken seriously when there is a true error, for example; the amount is incorrect, or the negative item does not belong to your friend in the first place.

To dispute a ChexSystems report, contact Chexsystems directly and submit the dispute to:

Chex Systems, Inc.

7805 Hudson Road, Suite 100

Woodbury, MN 55125

Or by phone at 800-428-9623

What next?

Now that you know why your friend can't open a bank account, here's a few helpful tips you can pass on to them;

A: They can try to work out a payment plan with the bank(s) they owe.

B: Tell your friend to consider cashing their paychecks at a check cashing service. Then, they can have the service write money orders for their bills and expenses. This is costly, because money orders could be delayed and cause expensive late fees (they wouldn't even k now about) and the check cashing fees are expensive.

C: The best option is to tell your friend to get a prepaid debit card to use in place of a checking account. Prepaid debit cards are a paperless checking accounts. The right prepaid card can receive direct deposits from anyone including payroll checks and Social Security.

The cards works like bank debit cards with the ability to get cash at ATMs and to make purchases in person, online or by phone anywhere Visa or MasterCard are accepted.

There are many places to get a pre-paid debit card but, it's important to do your homework before you open the account. Some things to look for are;

A: Will the card accept direct deposits from anyone?

B: Does it come with an online website to access balance information?

C: Can they transfer money from the card, can they do it online?

D: Are the fees reasonable or are they unreasonably high?

E: Can you get cash at ATMs?

F: Are there any ATMs you can get cash without penalties or fees?

G: Can you use the card worldwide?

H: Is it possible to get a card for your college kid and load it from your web interface?

I: Is the money instantly available or is there a wait?

J: Are there a charges for overdrawing the available balance?

Having a negative chexsystems report on your record can be a real nightmare. Until the matter is cleaned-up, which can be five-years the pre paid debit card issued from a non chexsystems bank can be a real problem solver, not to mention a big money saver!