A:

A bounced check does not directly affect your credit score, but it could have an indirect effect on it.

Banks do not report bounced checks to the major credit bureaus - Experian, Equifax and Transunion - so a bounced check won’t show up on your credit report and won’t impact your credit score.

Banks have the option, however, to report bounced checks to ChexSystems, a consumer-reporting agency for banking activity. This company helps banks identify consumers who present a risk because of their history of mishandling their accounts, and bouncing checks falls under that definition of risk. If your bank reports you to ChexSystems, the negative mark will remain on your account for five years. This could cause you opening a new bank account during this time.

To find out if your ChexSystems report contains any negative information, order your free ChexSystems Consumer Report online or by phone, fax or mail. Just like with a credit report, you can dispute any information you think is incorrect, and you may be allowed to submit a statement for your file presenting your side of the dispute.

Too many checks bounces could also cause problems when you want to pay by check with a merchant who uses a verification system called TeleCheck. If this system has linked the check you’ve presented for payment with a history of unpaid checks or bank account debt, it will decline your check and the merchant will ask you for an alternate form of payment.

If you bounce a check and don’t repay it, your bank could sue you or send your account to collections. The collection agency may report your unpaid debt to the traditional credit bureaus, and thus affecting your credit score. However, if you quickly repay your bank for the bounced check, it will have no reason to send your account to collections and the bounced check will not affect your credit score.

Another way a bounced check could indirectly affect your credit score is if you were using that check to pay a company that reports your repayment history to the credit agencies, such as your mortgage servicer or student loan servicer. In this case, it wouldn’t be a bounced check that would show up on your credit report, but a late payment. Again, if you correct the problem quickly (within 30 days of the payment due date), your creditor won’t report your account as past due and your bounced check won’t affect your credit score.

RELATED FAQS
  1. Will having several credit cards hurt my credit score?

    Having several credit cards, in and of itself, does not hurt your credit score. What matters are the specifics of those cards ... Read Full Answer >>
  2. How many free credit reports can you get per year?

    Individuals with valid Social Security numbers are permitted to receive up to three credit reports every 12 months rather ... Read Full Answer >>
  3. Is it possible to get a free credit report from Equifax?

    It is possible to get a free credit report from Equifax, as well as the other two major credit bureaus, Experian and TransUnion. ... Read Full Answer >>
  4. Do free credit reports affect your credit score?

    Free credit reports do not impact your credit score. Credit inquiries are divided into two categories: soft inquiries and ... Read Full Answer >>
  5. Does a free credit report show your credit score?

    The free credit reports available from the three credit reporting agencies do not include your credit score. Under the 2 ... Read Full Answer >>
  6. Is getting a free credit report safe?

    Getting a free credit report can be safe if you are careful about the particular website from which you get it. Credit reports ... Read Full Answer >>
Related Articles
  1. Credit & Loans

    5 Keys To Unlocking A Better Credit Score

    Follow these tips and techniques to rebuild a ruined credit rating.
  2. Credit & Loans

    Top Places To Get A Free Credit Score Or Report

    When's the last time you checked your credit report? With all the hacking out there, don't wait for the car dealer to find problems when you need a loan.
  3. Credit & Loans

    Applying For Credit Cards Affects Your Credit Score

    if you follow these simple rules, you should be able to refresh your plastic without causing a big hit to your score.
  4. Home & Auto

    Don't Be the Victim of Auto Loan Rip-Offs

    Subprime auto loans – and 60-day delinquencies – are up. These 4 signs of predatory auto loans can tip you off before you're caught in one.
  5. Credit & Loans

    A FICO-free Loan? See SoFi's Super Bowl Ad

    Non-bank lender SoFi will air its first TV ad during Super Bowl 50. Here's how it's challenging big banks by providing an alternative approach to loans.
  6. Credit & Loans

    5 Extreme Ways To Raise Your Credit Score

    Desperate to rebuild your credit score because you can’t obtain a loan with a decent interest rate? Here are some extreme options to try.
  7. Personal Finance

    The Top 5 Personal Finance Experts to Follow in 2016

    Here is a look at five money and investing experts who can help you reach your financial goals for 2016.
  8. Savings

    How Bank Cost-Cutting Could Affect You

    Banks are looking to cut costs. If history is any guide, it could be at your expense. Here's how to protect yourself.
  9. Retirement

    7 Ways to Use a Strong Credit Score During Retirement

    Find out why it is important to maintain a good credit in retirement. Learn seven reasons not to leave your credit score behind when you retire.
  10. Retirement

    6 Methods to Maintain a Healthy Credit Score During Retirement

    Learn how to improve your credit score during retirement. Your credit score still matters in retirement, and these tips can give it a boost.
RELATED TERMS
  1. Bounced Check

    A slang word for a check that cannot be processed because the ...
  2. Credit Report

    A detailed report of an individual's credit history prepared ...
  3. Credit Rating

    An assessment of the creditworthiness of a borrower in general ...
  4. Check

    A written, dated and signed instrument that contains an unconditional ...
  5. Bank Deposits

    Money placed into a banking institution for safekeeping. Bank ...
  6. Jamming

    A scam perpetrated by bogus credit repair firms that involves ...
Trading Center