An aqueous ink-jet ink composition for MICR applications is provided comprising a metal oxide pre-dispersion combined with an aqueous ink-jet ink composition, wherein the metal oxide pre-dispersion contains metal oxide pigment or particles of a very small particle size, about 0.5&mgr; or less, and exhibiting high remanence of at least 20 emu/g. The metal oxide particles may be coated with a hydrophilic coating, and the pre-dispersion may contain at least one surfactant to aid in the dispersion of the metal oxide particles. Also provided are various processing techniques to enhance the MICR ink performance, including conventional and non-conventional grinding techniques and various filtration techniques.