Do Bad Checks Show Up on a Credit Report?

On a positive note, a bad check probably won't show up on your credit report, but can become a far more serious problem -- maybe even resulting in criminal charges. Whether or not a check shows up on your credit report might be immaterial, because it definitely affects your ability to open a bank account. Bank accounts are often needed to start a credit account.

Identification

The credit reporting agencies do not track banking data, such as writing bad checks, according to Martha White of Wallet Pop in "Six Money Mistakes That Won't Hurt Your Credit Score." Only when the creditor initiates litigation can it appear on a credit report, because the court might award a judgment. Judgments appear on your credit report; the creditor can sell the judgment to a collection agency, which also appears on your credit report. In either case, a negative account is a huge drain on a credit score.

Banking History

The banking industry keeps track of check writing history through the ChexSystem. Some reporting agencies specialize in banking history too. Most banks run a report through the ChexSystem before opening an account for someone. A single bounced check is often all a bank needs to know to reject an application. Credit cards and installment loans often require a bank account as a condition of approval. If bounced checks prevent you from owning at least one account, you might not receive any credit in the future.

Preventing Bounced Checks

Always keep track of the balance on your bank account. Most banks offer online checking for this reason alone. Also, consider applying for overdraft protection or linking accounts. Overdraft protection usually requires a credit check, which dings your score a little bit, but it is probably worth the short-term hit if it prevents a bank from sending an overdue balance to a collection agency. In some cases where the attorney general of the state proves a case, you can go to jail for writing bad checks.

Tip

If you become a victim of check theft, review your credit report and warn the bank about potential fraudulent charges. A thief who steals checks might have stolen other items that contain your personal information and could be used to open credit accounts. Any new fraudulent accounts likely appear on your credit report eventually -- probably within the first billing cycle.