Do Non-Sufficient Funds Affect Your Credit?

Let's say you were strapped for cash and rashly decided to try to float a check. Unfortunately, the check hit your account before your deposit did and now you've incurred a non-sufficient fund fee. The fee hurts and so does the bounced check; but the impact to your credit score isn't the same as the impact to your banking credit.

Banking Relationship

Bouncing a check, swiping that card one too many times, pulling out cash you don't really have --- they all result in the same thing: a non-sufficient fund fee. The fee arises when the bank penalizes you for pushing your bank balance into the negative. Non-sufficient fund fees don't affect your credit score, but they do hurt your relationship with your bank and negatively impact your ability to borrow money in the future.

ChexSystems

The way you handle your banking affairs, including how often you get dinged with a non-sufficient fund fee or your accounts go into the negative, is reported by your bank to ChexSystems. ChexSystems is a financial, consumer reporting agency. It isn't a credit bureau but negative information reported to it can impact your financial future and lasts up to five years. You can be barred from opening other bank accounts or banned from writing checks.

Fees and More Fees

On top of hurting your reputation, going into the negative hurts your wallet. Banks charge up to $40 each time a transaction goes beyond your means, regardless of how much the transaction was worth. Three or more "oops" means up to $100 and more in bank fees, which takes away money you need to pay other bills. If you can't pay the fees, the bank can eventually close your account and report the action to ChexSystems.

What Can Hurt

Defaulting on a loan with the bank, or closing an account on which you had overdraft protection can negatively impact your credit score. Overdraft protection is essentially an as-needed loan, there to deposit money into your account whenever your spending is less than discreet. Closing your account of this nature is the same as closing a credit account.