Does Overdraft From Savings Hurt Credit Score?

Scores and Reports

Your credit report includes a list of your credit accounts and details of each account; information from collection agencies; and public information such as bankruptcies, foreclosures and judgment liens filed against you. Thirty-five percent of your FICO credit score is your payment history; 30 percent is the amount you owe; 15 percent is the length of your credit history; 10 percent is based on the number of new credit accounts and credit inquiries; and 10 percent on the type of credit used, such as mortgage loans, car loans, credit-card bills and other forms.

Overdraft Effect

Your credit score is based on information in your credit report, scored and ranked by credit agencies. Information about your overdrafts doesn't usually go into your credit report, so there's no way for them to affect your score. This assumes you pay off the overdraft in a reasonable time. If you leave the money unpaid, the bank could eventually turn the debt over to a collection agency. In that situation, the overdraft information will turn up on your credit report and could affect your score.

Problems

Even if your overdraft doesn't hurt your credit score, it can still hurt you. If you're applying for a loan, the lender may order a consumer report as well as a credit report, particularly if you're too young to have much of a credit history. A consumer report provides information about your banking history and any problems with your accounts. If your accounts are in good shape, this can help you land credit, but it could be a drawback if you have serious overdraft problems.

Considerations

Even if your credit score survives intact, overdrafts from your checking or savings account will trigger penalty fees. If it happens on a regular basis, the fees -- often $20 or $40 -- could add up to a substantial financial blow. You can protect yourself by having the bank withdraw money from your savings account when you overdraw checking or by setting up a line of credit to cover both accounts. Covering checks from your savings account won't show up on your credit report, but the credit line will.