Can Overdraft Check Hurt Your Credit History?

A bad check can impact your financial future.

Your credit rating can determine if you qualify to rent an apartment, buy a home or car, or even get a new job. An overdraft check can affect your credit rating and your future.

Overdraft

When a check is deposited and bounces because of insufficient funds, nothing is reported to the three major credit bureaus. There is no immediate impact on your credit report.

Collections

If you don't pay the overdraft amount in a certain amount of time, which is determined by your bank, the amounts due may be sent to a collections agency. If collections go unpaid, the debts will be reported to the credit bureaus, negatively impacting your credit.

ChexSystems

ChexSystems is a company that banks report to when you bounce a check or owe them money. Once in the ChexSystems database, you will have a much harder time opening a checking account in the future.

Fico Expansion Score

The Fico Expansion Score was developed for people who haven't established credit. This new scoring system reviews bank account activity and can directly affect credit history.

References

• Fico Expansion Score
• What You Need to Know About Bounced Checks
• Banking History Can Affect Your Credit
• Federal Reserve Board | Protecting Yourself From Overdraft and Bounced Check Fees