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Do negative balances and overdraft charges affect my credit score?
Do negative balances and overdraft charges from my checking account have an effect on my credit rating?
Asked by
TheSunKing
1 year ago
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The short answer is no, overdrafts on your checking account do not have any affect your credit score. Your credit scores are calculated according to a certain formula that takes into account information pertaining to outstanding debt, timeliness of payments, and related items. However, the determination of your credit score does not reflect any elements of your overdraft history with banks.
While overdrafts may not damage your credit score, they may cause your checking account to be canceled or applications to open new checking accounts to be rejected. Frequent overdrafts could cause your name to be reported to something called Chex Systems, a financial reporting system that banks refer to when considering a new checking account application. You can get reported to Chex Systems if eFunds, the company that invented and maintains Chex Systems, believes that you have abused your bank account or bank-related instruments in the past. This could potentially include overdrafts, especially if your bank covered your overdraft but you never paid them back for the amount they covered on your behalf.
tjarratt 1 year ago
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The short answer is no, overdrafts on your checking account do not have any affect your credit score. Your credit scores are calculated according to a certain formula that takes into account information pertaining to outstanding debt, timeliness of payments, and related items. However, the determination of your credit score does not reflect any elements of your overdraft history with banks.
While overdrafts may not damage your credit score, they may cause your checking account to be canceled or applications to open new checking accounts to be rejected. Frequent overdrafts could cause your name to be reported to something called Chex Systems, a financial reporting system that banks refer to when considering a new checking account application. You can get reported to Chex Systems if eFunds, the company that invented and maintains Chex Systems, believes that you have abused your bank account or bank-related instruments in the past. This could potentially include overdrafts, especially if your bank covered your overdraft but you never paid them back for the amount they covered on your behalf.
tjarratt 1 year ago