Does A Bounced Cheque Affect Your Credit Score?

In the business community, one of the most easy and convenient means of making a payment involves the use of a cheque. A cheque is a type of document that is usually issued to a bank by a person attempting to transfer a certain amount of money from his/her account to an account, of which the bank is in charge. It allows the convenient transfer of money, irrespective of amount, between one account to another. However, a cheque may be returned by a bank when there is insufficient funds in the account from which the specified fund is to be deducted. These cheques are known as bad cheques, and they can result in dire consequences for the issuers. 

Bad personal financial reports and fines

Generally, a person’s credit report does not necessarily consider whether he/she has a history of having had a cheque rejected by a bank. However, there are several databases that record bad cheques, and if a bounced cheque is recorded in one of these databases, the issuer may have difficulty writing cheques elsewhere. The person may have trouble trying to open a bank account, and if the person has had many cheques declined by the drawee banks, the banks may close his/her existing account. In addition, when a bank declines a cheque due to the account not having the required fund, the bank may charge the issuer a fine, which is known as a non-sufficient fund fee. 

What happens when you cheque bounces?

Having just had an issued cheque declined due to the fund in the account being insufficient, a person may be charged by the drawee bank a non-sufficient fund fee, the amount of which generally ranges from $27 to $35. The recipient may also try to charge the person a fee, and the amount of the fee is dependent upon how much the recipient has been charged by the bank that received the cheque. 

Possible legal trouble

If a person writes a cheque expecting that it will not be cleared by the drawee bank, his/her action is deemed to be illegal. The legal outcomes of this action vary from state to state. If a person bounces a cheque unintentionally, it is most likely that criminal charges will not be pressed against him/her. Criminal charges can result in imprisonment and/or hefty fines. However, the person may still face a legal action if the payee decides to initiate legal proceedings. In this case, it is highly likely that the person will be required to pay all the resulting legal fees and service charges. In addition, a penalty based on the amount of the bounced cheque may be imposed upon the person.

You don’t have to worry about it affecting your credit score as banks do not report to credit bureaus regarding bounced checks. If you’re worried about passing a soft credit check personal loan, you don’t have to be as there will be no such record on your financial history. However, dealing with the consequences of bouncing a cheque that you have written is tough. However, this can easily be avoided by directly eliminating the root of the problem. By just making sure that your account has the required fund before you issue a cheque, the chance of it being declined by the drawee bank can be significantly lowered.