Checking Account & Credit History

You could bounce checks all over town and it might not affect your credit, even if it is a crime. However, checking accounts often affect your credit history, mostly depending on what the bank decides to do with overdrawn accounts. In general, you should use checking accounts responsibly, because they may be important to getting a loan even if they do not affect your credit history.

Identification

Banking accounts can hurt your credit when the financial institution requires a hard inquiry into your credit history before approving the account. Alternatively, some banks do not perform credit checks unless the borrower asks for overdraft protection, a small loan that acts as a buffer for slight overages. A delinquent balance could appear on a credit report as a judgment or collection account if you write a bad check and the bank sues you or sells off the debt to a collector.

Considerations

Lenders always consider more than just the data on your credit report for their lending decisions. Some creditors, for example, also run a consumer report on applicants through the banking industry's version of the credit bureaus, called ChexSystem. Writing bad checks will likely appear on a ChexSystem report because most banks report to it. Banks that run a banking history tend to run a report on new borrowers more often than experienced customers.

Benefits

A ChexSystem report does not only detract from your ability to gain credit. When a borrower has no credit history with the major credit reporting bureaus, they might use a clean ChexSystem report as a sign that the borrower can be trusted with a credit card. Some credit cards for new borrowers, such as a secured account, require a checking or savings account to store a safety deposit.

Tip

Always review your credit reports from all three bureaus just in case the bank made an unauthorized inquiry into your credit. Banks sometimes qualify you for a credit card when you open a account and may run your report after including a consent form among the many pages of their application form. You can avoid the credit check for overdraft protection by linking other accounts with the bank to the checking line.