A Bank Account Closure Does Not Affect Your FICO Score

Question

We are a military family and move often. We had one open bank account in our old home town that we never used, but since we both had to be present to close, just have never closed. My husband paid a bill online a while back but clicked the wrong checking account and paid it out of this account by mistake, which did not have enough funds.

Since we never use the account whenever we get mail from them I simply throw it in the bank statement pile and never look at it. Then, I got what looked to be a debt collection notice, which I found wierd since we have great credit and aren’t over due on anything. Since the overdrawl had not been paid off in 90 days they closed our account. I of course paid it right away, but how bad will this bank account closure affect our current credit and for how long?

Response

It sounds like it never went to a collection agency and the notice was just from the bank. A bank closure itself does not negatively affect your credit –an overdraft fee that went into collections, however, does.

I think your best course of action would be to call the bank and kindly explain to them the situation just like you did in your email to me. More often than not you will find that small local banks are usually helpful with these types of situations. However, if you are dealing with a large bank such as Chase or Wells Fargo, your chances of resolving this are slim. Nonetheless, if in fact the overdraft did go into collections, it will remain on your credit report for 7 years and it will have a significant effect on your credit rating. It is for this reason, I strongly suggest you try to work with the bank as to ensure nothing is recorded on your credit report.