Bounced Checks and our Credit Scores
Various factors are there that affect the credit score of an individual in negative manner. However, the factor of bounced checks has been debatable. Most of the people are unaware of the fact whether writing bad checks would affect their credit score adversely or not. If you have been pondering over the same issue then you have landed at the right place.
Bounced Checks do not affect Credit Scores Directly
If you were in a habit of writing checks that bounce frequently then you would be glad to know that such matters are reported to main credit bureaus. As a result, they would be not being reflected in mainstream credit report and you can take a sigh of relief.
Well, this does not mean that no one is keeping record of your bounced checks and you can continue with them as long as you want. Issuing bad checks can affect your financial life in different ways.
- Lowering of Credit Limit
When your checks bounce the bank in which you hold an account keeps a record of it. As a result, the bank can lower down your credit limit and you might have to face great amount of inconvenience.
- Prohibited from Opening Checking Accounts
It is true that matters related to bounced checks is not reported to mainstream credit bureaus but another credit bureau keeps an account of it. This credit bureau is known as ChexSystems and it is responsible for handling activities related to checking account.
If your name is reported to the ChexSystems then you might be prohibited from opening checking account in any of the banks.
- Giving Charge of Collecting Debt to Collection Agencies
It has been seen that most of the companies appoint collection agencies to collect debt money. If the collection agency were given the charge of collecting money then it would be reflected on credit report. It would lower down the credit score and you might face great inconvenience due to it.
Though your bounce checks are not hitting your credit score directly but there is no escape to this as creditors and lenders are reporting it to the Credit Bureaus which hit your credit score indirectly. You should not make it a practice to write bad checks.
Take care that your bank account have enough balance on due date. If you can’t, then it is your responsibility to inform the recipient about the situation and make an alternate arrangement for payment.