Why Your Checking Account Is Vital To Your Credit History

If you’ve been doing any research about how to get and then maintain a good credit report, then you’ve undoubtedly read a lot about how to manage credit cards and other types of loans. But did you know that your checking account also plays an important part in your overall score? Why? Because the way you handle your checking account will be reflected in your credit report. In other words, if you write checks that are reported as insufficient funds, that information will be reported.

If this happens, it may make it virtually impossible to open another bank account, or even have the ability to write checks in stores, depending on your specific situation. In addition, each bounced check may stay on your credit report for seven years. Don’t let this happen to you!

Instead, learn how to manage your checking account responsibly, and use it to your advantage in credit situations. Here are some tips that will help you get started on the right road.

* Always know how much is in your checking account. This may sound basic, but many people simply log their checks and the associated payment in the debit column, but never bother to balance the account. They believe that they can keep a “running balance” in their head. This may work well for millionaires, but if you haven’t reached that status, don’t do it! It only takes a penny for you to go over your limit, and that will result in a bounced check, the scar on your credit history, plus all of the fees associated with it.
* In addition, it’s important for you to reconcile your account balance each and every month when you receive your bank statement. You’ll find an easy, step-by-step guide on the back of your statement. Don’t skip this vital step—the results could be a bounced check.
* If you decide to close one checking account and open another one, be sure to open the new account before closing the old one. Why? Because of tightened restrictions, you will have an easier time opening an account if it is a second one.
* If you do decide to close an account, it is vital that you don’t withdraw or transfer your money to the new one until you have paid all of the outstanding checks in the old one. Reconcile your balance, and then look for any outstanding check numbers that haven’t cleared. (There have been instances when an old check hasn’t been cashed for some reason, and then once the account is closed, the check is submitted for payment. This results in a bounced check.) If you find outstanding check numbers, contact the people to find out why the check hasn’t been presented for payment.


By carefully balancing your checking account each and every month and making sure that you never write bad checks, you will go a long way in keeping negative remarks off of your credit report.
 

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