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 hurt your 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.
Will bounced payment affect credit score? ›
The odd late or missed direct debit payment can affect your credit score but not by much. If you frequently have returned direct debits, then this can damage your credit score.
What happens if you write a check and it bounces? ›
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.
Does writing a check affect your credit score? ›
Your checking account usually has no impact on your credit score. Normal day-to-day use of your checking account, such as making deposits, writing checks, withdrawing funds, or transferring money to other accounts, does not appear on your credit report. Your credit report only includes money you owe or have owed.
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.”
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 a returned payment hurt my credit score? ›
If your payment is returned and you don't pay it within 30 days, it'll count both as a late payment and a missed payment, which can hurt your credit score if the issuer reports the missed payment to a credit bureau. The missed payment can stay on your credit report for up to seven years.
How long does it take for a credit score to recover from a missed payment? ›
All other negative marks fall off after seven years. If a single account has a series of negative marks (such as multiple late payments and then a collections account) and you never brought the account current, the seven-year timeline starts with the date of the first late payment.
Will a bounced check clear? ›
If you deposit a check that never clears because it was fraudulent or bounces, then the funds will be removed from your account. If you spent the funds, you will be responsible for repaying them. Some banks may charge an additional fee for depositing a bad check. Federal Trade Commission.
Writing a bad check is a crime if the check writer knew that there were insufficient funds to cover the check and intended to defraud you. It is also a crime to forge a check or write a fake check.
Who gets penalized for a bounced check? ›
The bank declines to honor the check and “bounces” it back to the account holder, who is typically charged a penalty fee for nonsufficient funds (NSF). A bounced check is sometimes called a “rubber check.” There are other factors that cause checks to bounce, but lack of funds is the most common one.
What happens if someone writes you a bad check and you cash it? ›
But you may be unpleasantly surprised to learn that in that situation, you could end up being charged a fee by your bank for trying to cash or deposit that cash. This is known as a returned check fee, and SoFi says that it could easily cost you $30 or $35 for a single incident.
Does bouncing a check affect 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 is the secret way to remove hard inquiries? ›
The easiest way is to file a dispute directly with the creditor. If the creditor cooperates, the inquiry may be removed after sending a single dispute letter.
What affects your credit score the most? ›
1. Most important: Payment history. Your payment history is one of the most important credit scoring factors and can have the biggest impact on your scores. Having a long history of on-time payments is best for your credit scores, while missing a payment could hurt them.
What are the disadvantages of a bounced cheque? ›
The payer may end up in jail for up to two years for issuing a dishonoured cheque. Apart from this, banks also charge penalty for dishonour of cheque. The penalty varies from bank to bank. Banks may have different penalty slabs for the amounts for which a dishonoured cheque is issued.
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 returned payment affect credit score? ›
A dip in your credit score
If your payment is returned and you don't pay it within 30 days, it'll count both as a late payment and a missed payment, which can hurt your credit score if the issuer reports the missed payment to a credit bureau. The missed payment can stay on your credit report for up to seven years.
What will most banks do about a bounced check? ›
When there are insufficient funds in an account, and a bank decides to bounce a check, it charges the account holder an NSF fee. If the bank accepts the check, but it makes the account negative, the bank charges an overdraft fee. If the account stays negative, the bank may charge an extended overdraft fee.
