However, your bank knows when you bounce checks, so they may reduce your credit limit if you have a credit line at the same bank.
In addition, bounced checks may be reported to ChexSystems. ChexSystems is like a credit bureau that only handles checking account activity. If ChexSystems reports that you’ve had problems with your checking account, it may be difficult to open checking accounts at other banks in the future.
You also run the risk that you’ll be sued or your account will be turned over to a collection agency. If the collection agency reports to the major credit bureaus, your mainstream credit scores will suffer.
Finally, some ‘alternative’ credit scoring models look for a history of bounced checks. If the mainstream credit bureaus do not have enough information about you (and you need to build credit), a lender might use one of these alternative credit scores and penalize you for bouncing checks.
Return to the main page on factors that affect credit.
