How Banking Activity Affects Your Buying Power

Checking and savings account activity doesn’t appear on your credit reports, but it can be reported and

shared similarly. For this reason, bouncing checks, ignoring loan payments, and other behaviors can

reduce your buying power.

We’ve talked before about how your credit score affects your financial health, and it’s true: Your creditscore is fundamental. However, your banking activity—including checking and savings account activity—is also vital. While that activity doesn’t appear on your credit report, it does show up on reports that creditunions and other financial institutions use to determine whether you’re a fit for loans, new checking orsavings accounts, and other financial tools. Some stores and vendors also use the reports to flag riskycheck transactions instantly.

TeleCheck is one such company that offers reports and check approvals. When a consumer writes acheck or applies to open an account, TeleCheck can be used to verify whether the person has unpaiddebt, a history of invalid or fraudulent check transactions, or sets off other potential fraud or high-riskindicators based on past banking history.

Having a check declined or being denied a loan or account can be startling, but you can take steps tocorrect the situation. First, it’s essential to find out why your banking history is being flagged. For privacyand security reasons, the person denying the transaction may not have that information. Instead, they’llreceive a code that you can then look up (you can ask the individual what reporting company they usedand visit that company’s website for more information). One of the following situations is likely occurring:

1. Your behavior caused the red flag. Repeatedly bouncing checks or overdrawing your account,  ignoring loan payments and, certainly, committing fraud (like altering checks or providing false  information) can severely impact your banking history.

2. Your banking history isn’t established yet. Companies like TeleCheck rely on this history to create  risk assessments. For that reason, sometimes too little history (not just poor history) can be a  factor in transactions being declined. If that’s the case, the company may ask you to submit  additional identifiable information to establish a positive file with them. 

3. You may be a victim of fraud or theft. These reports aren’t only designed to protect financial  institutions and stores, but they can help you by identifying fraudulent activity you may not be  aware of yet. Someone may have access to your checks or your accounts without your  knowledge, are printing/counterfeiting checks with your account number, are using your driver’s  license number to cash checks or other accounts or are linking their account to yours without your  permission.  

4. The information they have could be wrong or outdated. Like credit bureaus, TeleCheck and  similar screening companies are subject to the Fair Credit Reporting Act. That means they must  provide you a free report every 12 months if you request it. You can also dispute the information  you find on that report if you believe it’s inaccurate or incomplete. The company must then  conduct a free and reasonable investigation and correct any errors they find.