Do Bounced Checks Impact Your Credit Score?

A bounced check may or may not affect your credit score. If the check bounces, and you pay it promptly, it will likely not be reported to a credit bureau. However, if the check bounces, and you fail to cover it, the check may be passed on to a collections agency.

If the collections agency does not receive payment for the check (usually within 90 days), it may report the bounced check to a credit bureau. This report will affect your credit rating.

Companies likely to turn your unpaid check over to a collection agency include:

• Grocery stores
• Chain stores
• Utility companies

However, you are best to err on the side of caution, because any company may have the right to report your bounced check to a credit bureau. The best strategy is to cover bounced checks as soon as possible. Make sure you cover any additional fees your bank and the company charge you for the bounced check.

A bounced check may also be reported to other consumer information agencies. These agencies provide information about your credit and payment history to entities like:

• Payday loan services
• Car dealers and auto financing companies
• Utilities companies
• Insurance companies

While a bounced check may not hurt your credit score, it may create difficulties for you to access loans or access new utilities when you move. Make it a point to balance your checkbook regularly so checks do not bounce.

A more expensive option is to sign up for overdraft protection through your bank to allow overdraft of your account until you can make a deposit. However, you may have to pay relatively expensive fees for this privilege.

To check your credit report, contact one of the credit bureaus at www.experian.com, www.transunion.com, or www.equifax.com.

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