You can generate a spiraling good or bad history of your bank accounts that goes all the way to your credit report.
It is known to many that having a checking or savings account does not affect the credit score itself, despite having to pay its expenses: fees, overdraft fees or even the charges for using ATMs that are not part of the network. In reality, credit cards are the basic products that help build a history and then be considered for other loans. But poor management of bank accounts could harm you or discourage your credit claims.
For people with no credit history, applying for and being approved for a credit card can be complicated. The lender reviews your report to see if you are a trustworthy borrower. Without it, there is no way to know how you handle debt.
Banks often review applicant history through ChexSystems, a reporting agency that focuses on your new checking and/or savings account applications and openings. In this register you can analyze past savings, your checking account movement history, unpaid negative balances due to overdrafts, frequent charges for the same concept, bad checks or suspected fraud.
This type of information becomes a spiral of good or bad historical data. While ChexSystems doesn’t have a direct impact on your credit score, Experian notes that the report can reveal problem areas in your finances that affect both your credit and banking history. Through ChexSystems you may be denied or accepted any type of bank account and therefore also move away or closer to a credit history.
As mentioned by CNBC Select, there may be no relationship between the ChexSystems report and your credit report, but a negative entry in your banking history serves as a bigger red flag and can make you aware of things you didn’t know about. of your own finances. For example, a negative checking account balance could be sent to a debt collection agency, which could then report it to one of the three major credit bureaus. If this happens, your credit score would be affected.
If you want to see what your ChexSystems report looks like, you can receive a free copy once every 12 months by visiting their website or calling 800-428-9623.