Credit Bank Account Misuse Affects Your Credit Rating

A credit bank account is important to your credit score. Many people have found ways to misuse their checking accounts, and this can really hurt your credit rating overall. Not only may you face collection fees and garnishments, but your credit can also be negatively impacted. There are a few things to keep in mind:

Non Sufficient Funds
Any time you don’t have the money in your account to cover a check or a debit card transaction the transaction is returned to the merchant as an NSF, or non sufficient funds transaction. Not only will the merchant come back to you to collect this, they will usually add a fee charged by their bank for the returned item. Your bank will also charge you a fee for the returned item. Not only do you end up paying for the item in question, but you can face as much as $100 additional just in bank fees. Banks will tack on a fee, generally around $30, to cover the item. If you have an account closed because of this not only does it get reported to the credit bureaus, you may not be able to open another account with another bank down the line.

Repercussions of Account Misuse
When it comes to bank accounts, you have to be very careful. Adverse credit bank accounts will show on your credit report, and in some instances can cause multiple entries. For example, if you bounce a check to a local grocery store and your bank doesn’t honor the check, not only will you face action from your bank, you will also face action from the grocery store as well.

The way it works is the grocery store will come back and want their money, plus collection fees. If you don’t pay this then they will sell it to a collection agency. If it still goes unpaid, you will have two entries on your credit report from the grocery store, one from the store itself and one from the collection agency. If you don’t pay the fee back to the bank, they will do the same thing. So this one bounced check can result in four separate entries on your credit report.

It’s important to make sure you are keeping a good personal accounting of your money and avoid misusing your account. If you don’t have the money to cover a transaction, don’t make it. Using a debit card can help you prevent going over your available balance. Even one bounced check can ruin your credit score.

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