Overdraft does not harm credit, however it is not harmless

A lot of people know that not paying bills on time or sustaining a high balance on several charge cards can result in damaging marks against their FICO score. There are other things that may or may not, however. For instance, will overdrafts affect a credit score? According to financial planner Don Taylor, the answer depends upon a number of factors.

More than just an overdraft fee is needed to hurt credit

There was a university student really concerned about hurting her credit with checking account scams. She asked for advice at Bankrate’s “Dr. Don” column. Her checkbook was stolen and someone wrote checks with it. Then her checking account went into overdraft from it. She was wonder if her FICO would be affected while waiting a couple of weeks for her bank account to go back in the black. After she sent a fraud notification to her financial institution and one of the three major credit bureaus, no other identity theft happened.

Taylor explained that a consumer’s checking ledger transactions do not matter. A credit rating won’t change depending on it. Overdrafts typically don’t, although missing bill payments will. One exception is when a banking institution does a “hard pull” of a consumer’s credit history when a new checking account is opened.

It won’t cost you anything to know about your banking

According to Taylor, consumers are able to check on their banking history. ChexSystems is the best system to use. This business enables consumers to pull one free banking history report every 12 months, as stipulated in the Fair and Accurate Credit Transactions Act (FACTA). It is bas when there are damaging marks. They stay for five years at the very least.

ChexSystems is a fantastic place to get information to help consumers know why they get denied if they are ever denied for a financial institution or credit union account. It may be worth checking out ChexSystems Customer Assistance each year even if that is not the case.

Stay away from scams

If you are the subject of a financial scam involving fraudulent checks, contact your banking institution and law enforcement. HSH.com can help you if you need to talk to your state’s banking commission to protect others from the same scam.

Articles cited

Bankrate

bankrate.com/finance/checking/overdrawn-account-won-t-ruin-credit-score.aspx?ic_id=tsThumb4

Consumer Debit

consumerdebit.com/consumerinfo/us/en/freereport.htm

HSH

library.hsh.com/read_article-hsh.asp?row_id=67

Get your bank account history once per year

youtube.com/watch?v=xazfPvwCMTw