Do Returned Checks Go on Your Credit Report?

Writing a bad or "bounced" check could become fraud and might even ruin your credit history. The major credit reporting bureaus do not report banking history, so it is likely that a returned check only hampers your ability to acquire a bank account. As credit scoring models evolve, however, bounced checks could become part of any standard credit risk analysis.

Identification

As of 2010, the major credit bureaus in the U.S. use a credit scoring model developed and maintained by the Fair Isaac Corporation that does not factor bounced checks into a consumer's credit score. The Fair Isaac Corporation does have specialty scores that use nontraditional payment data, such as bounced checks, for people without credit history--called FICO Expansion. If your lender uses a FICO Expansion score, returned checks go on your report and damage your credit.

Banking History

Bouncing a check almost assuredly ruins your banking history. Credit educator Carreon and Associates says 80 percent of banks and credit unions belong to the ChexSystems network--an agency that reports banking information like credit rating agencies do for consumer credit data. ChexSystems reports bad items such as bounced checks for five years. As of 2010, ChexSystems reports have stopped 19 million Americans from acquiring a bank account, according to Carreon and Associates.

Potential

Because bounced checks can become a criminal and civil matter, you could receive a judgment which may show up on your credit report. The major bureaus frequently scan national databases for public judgments, so it will only be a matter of time before they find out. Each type of public judgment has an unique effect on a credit score, but they are all serious negative information and will probably drop your score by at least 100 points if you have good credit, according to CNN.

Prevention

You can prevent most returned checks by keeping an on your account balance and registering checks in your logbook as soon as you write them. Financial institutions often offer "bounce coverage" plans on their accounts, which come with a $20 to $30 fee for each returned check, but prevent consumer reporting agencies from finding out about it. You can also link other accounts to your checking account and purchase a special line of credit for overdrafts. If for some reason you still bounce a check, cover the outstanding balance and fees immediately to prevent further overdraft or bounced check fees.