What Really Happens If I Bounce a Check?

Most people know they shouldn’t bounce checks: It can be embarrassing, not to mention expensive, because returned checks or bank account overdrafts often result in fees. That may not seem too bad, but if they’re not dealt with, bad checks can cause you a lot of problems.

Bouncing Into Debt

Checking accounts and credit usually exist in separate financial circles — for example, debit cards have no impact on your credit — but in the case of bounced checks, there’s an exception. If you write a check that doesn’t clear, the person or company you intended to pay with it can send the outstanding balance to a debt collector. Collections accounts are among the many things that can have a negative impact on your credit standing (your credit scores are determined by these five main factors), and poor credit can make it harder for you to get a loan or credit card, as well as low interest rates on those products.

You may also find yourself in legal trouble if you bounce a check. When you fill out the “Pay to the order of” line, you should know that person can come after you for sending inadequate payment. If you don’t pay up, whoever you owe can sue you for the unpaid balance, and if they win, you may see a judgment on your credit report. Creditors consider judgments seriously negative items, and they can stay on your credit report for years, but you can get past their negative effects. For instance, if you want to buy a home, you’ll need to pay the judgment before getting a mortgage — here’s more on that.

Bouncers Can Get Blacklisted

A bounced check isn’t reported to credit bureaus like Equifax, Experian or TransUnion, but they can be reported to debit bureaus. Among the most well-known is ChexSystems, which collects financial data on savings and checking accounts. Like credit reports, lenders and other service providers use this information to assess the risk of doing business with a particular consumer.

“If you bounce a check it would be in a debit bureau report, which could affect your ability to obtain financial services, rent an apartment, get a cellphone, etc., even though your credit report is very good,” said Rod Griffin, Experian’s director of public education.

Like credit reports, you’re entitled to a free annual copy of your debit report, which you can request through the bureau. (You can get your free annual credit reports here.)

Griffin said it’s uncommon for a bounced check to end up in collections or result in a civil judgment, but it’s not a risk you should take. It’s important to maintain the best credit rating you can, because good credit scores often help consumers save money. You can monitor your credit for free through Credit.com, where you get updates on two of your credit scores every month.