Some of you may not know what a overdraft is. For all of you who don’t, it’s whenever you write a check and you don’t have money to cover it. If you don’t have the money, the bank will have to cover those expenses if you write a check for $75, for example. When that happens, you wind up getting overdrawn and a fee is incurred as a result of it. When an bank overdraft happens, that brings your account into the numbers that are negative. Most banks will charge a $35 or $45 fee for being forced to cover the expense.
This may maybe not seem like a big deal to a number of you, especially if it just occurs once or twice. But it can have a bad impact on your banking, and your credit history, if it happens more than once or twice. Every time that overdraft occurs, it gets delivered right to your credit history. That has a direct impact on your credit score.
What ways will this have an impact on your credit score rating score? For one, it will affect the bill you are paying. If you skip one payment, due to insufficient funds, this gets reported to the credit bureau. Your check will bounce, plus the ongoing company you owe cash will not get their money. One missed repayment may not have a huge affect on your rating, but several missed payments will. The more you bounce your checks, the greater your history and score gets affected. You can have a hard time getting a job, due to this delinquency.
How about the overdraft fees? It might not be a big deal, if you have just one overdraft. But in the event that you keep incurring draft after draft, the money adds up. The bank can charge hundreds of dollars for unpaid debts. The bank will charge a fee that $35, if not more, to cover that debt. But that money needs to get put back. You can’t keep your account in the negative. The longer your account remains in the negative, the more the bank has to pay for exactly what you owe. That money still needs to get paid back. When that occurs they charge a bounce-check fee on top of the fees already incurred.
The deeper the hole, the longer it takes to climb away from it. If it gets to this point, your bank will place your account into collections. This means that any cost that requires to get paid back, gets reported by them. This will affect your credit score.
Another negative side effect of the issue is that the bank can put a freeze on your accounts. Any wages, which you make, goes directly to paying off your debts. That entails that your other bills are affected too. Your bank can press charges against you. In the event that you are convicted of the debt, you may have to pay for restitution fees. Every fee which includes every been charged to your account will need certainly to be paid back.
This also spells disaster for the credit history. Anything you do, don’t allow it to get this far. Keep track of the accounts. Just one bank overdraft can ruin your credit score rating rating and score for a lifetime.