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. How does your checking account affect your credit score?

    Learn how your checking account is related to your credit score, as well as what types of banking activities do and do not ... Read Answer >>
  2. Will using an overdraft hurt my credit score?

    Find out if overdrafting a bank account hurts a credit score, how reporting is handled and if a consumer is able to dispute ... Read Answer >>
  3. What are the best ways to rebuild my credit score quickly?

    Repair your credit score more quickly by talking to your lender, increasing the credit limit on your existing credit cards ... Read Answer >>
  4. Will having several credit cards hurt my credit score?

    The manner in which you use your credit cards may affect your credit score more than the number of credit cards you own will. Read Answer >>
  5. How can I improve my credit score?

    If you are looking to take out a loan or apply for a credit card, then it will be very important for you to have a good credit ... Read Answer >>
  6. Does a free credit report show your credit score?

    Find out how you can obtain your credit score, and find out whether your score is included in your free annual credit reports. Read Answer >>
Related Articles
  1. Credit & Loans

    Fixing Your Credit Score: A Do It Yourself Guide

    Following these five steps can go a long way toward repairing a low score.
  2. Credit & Loans

    Check Your Checking-Account History

    Something you never thought you’d have to worry about: whether a bank will grant you a checking account. If you’ve had too many overdrafts, it might not.
  3. 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.
  4. Credit & Loans

    5 Common Misconceptions About Your Credit Report

    Your credit report is one of the most important factors in determining your ability to get loans and new credit and has a major influence on your rates.
  5. Credit & Loans

    The 5 Biggest Factors That Affect Your Credit

    Credit companies rely on these factors to determine whether to lend to you and at what rate.
  6. Credit & Loans

    5 Ways to Up Your Credit Score in 90 days or Less

    Getting that credit report glowing again may be easier than you think. Read on for some quick fixes.
  7. Credit & Loans

    Millennials: Prevent a Bad Credit Score

    Here are five ways to help prevent getting a bad credit score that could affect future loan, credit card or mortgage approvals.
  8. Credit & Loans

    How Bad Is My Credit Score?

    You've seen the number, but what does it mean? Here's how to assess your credit score and get to a better place if needed.
  9. Credit & Loans

    How To Boost Your Credit Score To Save Thousands

    One of the first steps you should follow before buying a home is to boost your credit score. And how do you do that? Here, we tell you how.
  10. Credit & Loans

    Surprising Ways a Mortgage Affects a Credit Score

    It takes a good credit score to get favorable mortgage rates. Then, how you pay a mortgage will shape your score – just having one can lower it at first.
RELATED TERMS
  1. Credit Mix

    The types of accounts that make up a consumer’s credit report. ...
  2. Consumer Credit File

    A collection of data about an individual’s borrowing and repayment ...
  3. Soft Inquiry

    A credit report check that does not affect an individual's credit ...
  4. Negative Information

    Data in a consumer’s credit report that lowers his or her credit ...
  5. Bounced Check

    A slang word for a check that cannot be processed because the ...
  6. Credit Utilization Ratio

    An input used in determining a person's credit score. It is the ...

You May Also Like

Trading Center