A bounced check will not directly affect your credit score. Banks do not report bounced checks to the major credit bureaus, so if one returns to marked "insufficient funds," it won’t show up on your credit report from Equifax, Experian, or TransUnion—and won’t hurt your credit score.
But a bounced check can damage your financial standing—and eventually your credit score—in several other ways.
- Banks don't report bounced checks to the credit bureaus, so writing one won't directly affect your credit score.
- If you fail to pay a debt on time because your check bounces, that late payment could end up on your credit report.
- Bouncing a check can hurt you in other ways, such as causing merchants to refuse to accept your checks.
A Bad Mark With the Banks
Banks have the option to report bounced checks to Chex Systems, a consumer reporting agency for banking activity. This company helps banks identify customers who present a risk because of a history of mishandling their accounts. Bouncing a check falls under that definition of risk.
If your bank reports you to Chex Systems, the negative mark will remain on your record there for five years. This mark could prevent you from opening a new bank account during that period.
You can find out if Chex Systems has any negative information about you by ordering a complimentary Chex Systems consumer disclosure report. Under the federal Fair Credit Reporting Act (FCRA) you can request one free report every 12 months. Information on how to request your report is available on the Chex Systems website.
As 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.
Another Bad Mark, With Merchants
Writing too many bounced checks may also prevent you from paying merchants by check in the future.
Many merchants use a verification system called TeleCheck to help them determine if a customer's check is good. If this system connects the check you’ve just presented for payment to a history of unpaid checks, the merchant will decline your check and ask you for a different form of payment.
The Potential Risks to Your Credit Score
A bounced check can indirectly affect your credit score if you used it to pay a debt to a company that routinely reports your payment history to the credit agencies. That includes mortgage and student loan payments, and credit card issuers.
In this case, it would show up on your credit report as a late payment, not a bounced check. If you correct the problem within a month of the payment due date, the bounced check won’t affect your credit score.
If you make good on your bounced check within 30 days, a creditor usually won't report your account as being past due.
Similarly, if you bounce a check and don’t deposit sufficient money to cover it, your bank could sue you or send your account to a collection agency. The collection agency may then report your unpaid debt to the credit bureaus, damaging your credit score. But if you immediately deposit enough money to cover the bounced check, the bank will not send your account to collections and the bounced check will not affect your credit score.
The Legal Risks of Writing Bad Checks
People don't usually get jailed for writing the occasional bounced check. If they did, most of us would be behind bars. But if it looks like you wrote a check knowing that it was no good, and you fail to cover your bad check and the bank overdraft fee, you could be in real trouble.
The laws vary by state, but generally writing a bad check can be a misdemeanor or a felony, depending on the size of the check. In either case, it can lead to jail time or a fine, or both.