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 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.
Key Takeaways
- 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 ChexSystems, 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 ChexSystems, 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 ChexSystems has any negative informationabout you by ordering a complimentary ChexSystems 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 ChexSystems 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 willnot 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.
FAQs
Banks don't report bounced checks to credit agencies like Experian, Equifax or TransUnion, so it won't have a direct impact on your credit score. But if you were writing the check to pay a debt, like a credit card bill or mortgage, the fact that you didn't make a timely payment could be reflected on your credit report.
Does bouncing a check affect credit score? ›
Banks don't report bounced checks to credit agencies like Experian, Equifax or TransUnion, so it won't have a direct impact on your credit score. But if you were writing the check to pay a debt, like a credit card bill or mortgage, the fact that you didn't make a timely payment could be reflected on your credit report.
What are the consequences of bouncing a check? ›
Bounced checks result in fees for both the check writer and the recipient, such as overdraft fees and returned check fees. If a check bounces, the check writer may face additional charges, while the recipient should contact the check writer to resolve the issue.
Will a returned payment hurt my credit score? ›
Returned payment fees by themselves won't impact your credit score in any way. However, if you have a payment returned and you don't make up the payment within 30 days of your due date, the lender may report the missed payment to the credit bureaus.
Does writing a bad check affect your credit score? ›
Banks and credit unions usually don't report a bounced check to the credit reporting agencies, but if you often write bad checks, the bank or credit unions may report that to a specialty credit-reporting agency that specializes in checking information.
What happens if you write a check with insufficient funds? ›
The bounced check will be returned to you, and you'll likely be subject to an overdraft fee and/or a nonsufficient funds fee. Is it illegal to bounce a check? It is a crime to knowingly write a check that will bounce. You could be charged with a misdemeanor or a felony for writing bad checks.
Will check affect credit score? ›
Checking your credit score on your own, which is a soft credit check or inquiry, doesn't hurt your credit score. But when a creditor or lender runs a credit check, that's often a hard credit check, which could affect your credit score.
Will bounced payment affect credit score? ›
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.
Why did my credit score go down if I paid my bill? ›
It might reduce the types, or 'mix,' of credit you have
But now you have one less account, and if all your remaining open accounts are credit cards, that hurts your credit mix. You may see a score dip — even though you did exactly what you agreed to do by paying off the loan.
How much will my credit score go down if I miss a payment? ›
Once a late payment hits your credit reports, your credit score can drop as much as 180 points. Consumers with high credit scores may see a bigger drop than those with low scores. Some lenders don't report a payment late until it's 60 days past due, but you shouldn't count on this when planning your payment.
The bank will "bounce" the check if you write a bad one because there are insufficient funds in your account to cover it. It will decline to pay the amount. But some individuals write and try to pass checks even though they know there's not enough money in their accounts to cover them.
Do bounced checks go to collections? ›
Financial Consequences of a Bounced Check
If you miss a payment because your check did not go through and you never bring the account current, however, it may be reported as a collection account. Debt accounts such as loans and credit cards may be reported as delinquent once the payment is 30 days late or more.
How many points does a credit check hurt your score? ›
A hard credit inquiry could lower your credit score by as much as 10 points, though in many cases, the damage probably won't be that significant. As FICO explains, “For most people, one additional credit inquiry will take less than five points off their FICO Scores.”
What is the impact of a cheque bounce? ›
The payer may be prosecuted for issuing a cheque against an account with insufficient funds. The payee may choose to prosecute the payer or allow the payer to re-issue a cheque within three months. The payer may end up in jail for up to two years for issuing a dishonoured cheque.
Does your credit score go down when a lender checks it? ›
Inquiries can be seen by other lenders when they check your credit. Inquiries tell other lenders that you are thinking of taking on new debt. An inquiry typically has a small negative effect on your credit scores. Inquiries are a necessary part of applying for a mortgage, so you can't avoid them altogether.
Does a bounced check show up on your bank statement? ›
You can know if your check bounced by checking your bank statement for a notation like "returned" or "NSF." You may also be notified by the payee.
Does a bounced debit order affect credit score? ›
What happens when you don't have sufficient funds? Not being able to pay your debit order because of low funds will result in a penalty fee, as well as a late-payment fee and added interest to your account. Bounced debit orders can reflect negatively on your credit profile, and affect your credit history in future.
