Q&A: How Can Your Bank Overdrafts Affect Your Credit Score?
Ooops – another bank overdraft again today!
If you find yourself saying these words to yourself a bit too often, you are likely accumulating a ton of overdraft fees. For customers of many of the major national banks, just three overdrafts can cost you $100 or more – too rich for the blood of most people just trying to make a living.
Besides paying all of those fees, many people are concerned and ask themselves: “How can your bank overdrafts affect your credit score?”
The good news is that your credit score is calculated based upon a host of factors related to your history of borrowing and paying back money – not on your checking account overdraft history. (For more on how to raise your credit score, check out: http://www.37-day-credit-plan.info/.)
The bad news, however, is that having too many overdrafts could cause you to show up on a database called Chex Systems. This is a computer system that banks used to determine new applicants’ credit-worthiness from the perspective of being a risky new customer. There is no scoring system in Chex System. However, if you show up in Chex Systems, your new checking account application could be instantly turned down. Luckily, there are some banks that do not use this risk assessment database when considering new checking account applications. Here is a list of such banks: http://www.whichbanksdonotusechexsystems.com/.
Meanwhile, for more information on the relationship between bank overdrafts and your credit score, check out: http://www.squidoo.com/bank-overdrafts-effect-on-your-credit-score/.
