Early Warning System (EWS)
Most people have never heard of Early Warning System (EWS), and those who have don’t realize that their bank account may be linked to it. By arming yourself with knowledge, you’ll be better able to make smarter decisions and completely understand how your money and your actions are being recorded by banks in order to make decisions regarding you and your future as their patron.
What is EWS?
EWS is a system that is now becoming quite popular amongst banks, including all the major names. It’s a system that records information into a database, and allows financial institutions access to that information in order to assess risks when it comes to people trying to open accounts with them. If you’ve ever been denied an account through Chase, this may have had something to do with it. In the past, most banks used a system called ChexSystems, which created a database that tracked the actions and penalties of your checking. For example, if a check bounced, it was recorded and kept for banks to see in the future. Based on this information, banks would then decide if you were worth the potential risk, or if they should skip over you and play it safe. Most people claim that EWS is taking over as the main source of information for banks, but most of the time, financial institutions use both systems at the same time.
Why is This Important?
The problem found in this system really only effects the consumers of the world. Banks have, at their fingertips, a great system that can really provide them with a fantastic amount of information. Unfortunately, that information isn’t always the most reliable set of characteristics that give them a full picture of what a possible patron is like. Some common problems that will hurt an individual’s ability to open an account with a bank involve:
- Fraud – Your status with the bank can be hurt by fraud. This can entail a great number of things, and brings with it a multitude of consequence, including your credit score decreasing. Ignoring the vast amounts of things that will be harder for you to get because of a ruined credit score, any kind of fraud can hurt you because of all the marks it causes in the database of financial decisions. Sometimes, after being attacked, banks will see you as less responsible when most of the actions you’re being blamed for were not your fault. There’s no way for a bank to note this, so you’ll end up being denied before being asked.
- Mistakes – If there were any checking account mistakes, or payment problems, then the bank is just going to see the aftermath. Unfortunately, this is a lot like fraud. There’s no way for banks to find out which were mistakes and which were real indications of risks. This is an important reason to keep track of all your finances and to try to be as careful as possible when it comes to catching mistakes before they happen.
- Bad Timing – Some mistakes are real, and unfortunately happen to everyone. One scenario is sending a check, and forgetting about it. Most young checking account holders no longer keep a checkbook, or write memos to themselves about how much they’re sending out in checks. Sometimes, while your bank account is lower than usual right before a paycheck, someone you forgot about cashes a check for an amount you no longer have. This causes the check to bounce, and negatively affects how banks see you. The best thing to do in this case is up your diligence when it comes to keeping track of your money. Unfortunately, bounced checks are a huge red flag for banks, and will cause you to lose in the end.