Does being overdrawn all the time affect your credit rating?

Question

Does being overdrawn all the time affect your credit rating?

Answer 1

Short answer. Yes.  When your checks bounce, the company getting inconvenienced can and probably will report you as a non or late payer.

Answer 2

Not if its an authorised overdraft.

Answer 3

Bank accounts aren't typically reported to the credit bureaus.

However, if you're in the red long enough that the bank has decided they don't have a chance of getting their money back, they can and will send you to a collection agency.  Having a debt go to collections will ravage your credit for the next 7 years.

So yes, being overdrawn all of the time can eventually affect your credit if the bank chooses to collect upon the overdrawn amount.

Answer 4

If you have overdraft protection on a bank account, then no you only need repay it as agreed.

If you don't have overdraft you'll likely pay a service charge plus any daily applicable interest until the overdraft is covered.

Worse case scenario is if you're grossly overdrawn and the bank feels you don't intend to clear it they will eventually send the account to collections, that's when it slaps your credit.