Bounced checks hurt my approval

[Anonymous]

I have worked very hard to raise my credit score.  I operate my checking account with such vagueness.  This has resulted in Overdrafts.  I was told today that I would n't qualifiy for a FHA home loan (or Con) because of the overdrafts on my checking acount.  He said over two overdrafts is a big red flag.  Seriously... are there other big red flags that I don't know about.  

My three scores are all above 700.  I guess its time to work on a big down payment and not bouncing any checks.  I wanted to move out in the summer to my own home.  How come no one talked about this?  

I wonder how many times I sabatogue myself.  Today is the first day going forward.

[JM-AM]

Bouncing checjks and check overdrafts can cause set backs.

Bounced checks are considered negative payments even if you pay tge creditor late.

Overdraft protection is not as bad and usially can be explained.

When you have multiple of either it shows poor financial planning. This causes a damper when applying for mortgage.

Anyone applying for mortgage generally does all they can not to cause anything negative to happen within the last year before applying.

If you had bounced checks you probably will have to wait at least a year. If they were overdrafts you may want to try a different lender.

[MovingForward_2012]

+1, unfortunately on what JM-AM said. I don't have a spreadsheet nor do I balance my checking account. It is all in my head. Most charges are put on credit and I pay the balance in full every month. I know when all the auto debits are clearing and I have a general amount needed plus cushion in my checking account to cover those charges. I also have mobile banking and I check my account everyday (sometimes multiple times per day) to see if I missed something that should have been accounted for. If I did, I transfer funds to checking from savings manually before the credit union does. I have no overdraft protection. I don't think I have bounced a check in 10 years. I would check your account more frequently and make notes of things that are clearing that you think you will forget about.

[daninicole]

Did he give a time frame? Is it that you had so many in a certain amount of time or was it the fact that you had them period. (I really hoped it's the time frame thing).  I am hoping to buy a house this time or later next year. I have a couple of bounced checks here and there. I am going to start working on improving my credit/finances once we sell our home (hopefully this month). I plan on staying on top of everything and getting things low and debt reduced. I am hoping for no bounced checks in this time frame seeing that I will be living with my parents which will eliminate many of my bills. I know things happen so I am really hoping it was time frame thing and not bounced checks period. I mean things happen and you have to do what you have to do to make sure you can get what you need.

[Mike_B03]

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@Anonymous wrote:

I have worked very hard to raise my credit score.  I operate my checking account with such vagueness.  This has resulted in Overdrafts.  I was told today that I would n't qualifiy for a FHA home loan (or Con) because of the overdrafts on my checking acount.  He said over two overdrafts is a big red flag.  Seriously... are there other big red flags that I don't know about.  

My three scores are all above 700.  I guess its time to work on a big down payment and not bouncing any checks.  I wanted to move out in the summer to my own home.  How come no one talked about this?  

I wonder how many times I sabatogue myself.  Today is the first day going forward.

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How many did you have and over what period? 

Most poeple do not know that this is something they look at but it certainly is. If there is a clear explination of why it happened, and it's a mistake/very rare occurance, it's usually not a problem. 

Normally you only have to show two bank statements so if you want two months and apply again, it may be ok, though some bank statements show on on-going year to date record of how many you've had (Chase does this). 

[StartingOver10]

MovingForward's system seems very complex.

If you look at it from the u/w POV, then it would make sense that NSF's and OD's show a financial hardship rather than financial stability. But keeping a running balance in your head is ripe for error. It is much easier to just keep a register or log. It takes a few minutes and once you have it set up you know where you stand always. Naturally reconciling against the bank balance takes a few minutes, but not long if you take about 10 minutes a day to do it. Then you never have to worry about NSF's or OD's. It certainly keeps the stress off by having a accurate ledger.

[violetsmom]

Are you talking multiple overdrafts in the last few months?  We provided 2 months of bank statements, which were free of any overdraft charges but we did have an incident earlier in the year that resulted in an overdraft.  It was not on the statement provided, nor were we ever asked if we had any overdrafts/bounced checks in any given timeframe.

[tooleman694]

I get overdrafts from time to time just from being lazy.

6 figure income, a ton of cash in savings.. but sometimes I let it go on cruise control and whoops.

We are going back into underwriting here very soon, so iv made sure everything is perfect and stopped being lazy lol.

[bobebob]

I hadn't even thought about it. But I'm in the middle of a refinance now and technically I've had two bounced checks this year.

i say technically because Amex took out full payment of my bill after I had already made the payment manually on their website. The double payment of my full statement amount was too much and their automatic payment bounced.  I called them and they weren't sympathetic pointing out that it says in my statement that the autopayment can't be changed two days before its scheduled.  Sure enough I found it buried on page three.

Worse, the next day after I called them the autopayment attempted to post again and of course bounced.  Livid, I called Amex again and they said "sorry it's an automated system and we can't change it". They said it would resubmit the payment twice. Which meant I would have a third bounced check in as many days.

Fortunately, BOFA was sympathetic.  They reversed the two overdraft charges and did a stop check to prevent the third from posting. Needless to say, I don't use the autopayment feature from Amex anymore.  And I was actually impressed by BOFA's willingness to refund the fees and not even charge me for the stop payment on the check.

I don't think that the bounced checks were left in the system to report anywhere since my lender already pulled my credit and I haven't heard anything about them.  I hadn't even thought about them possibly being a problem until I read this thread.  I think the explanation would be straight forward if it did come up.  But I'm just as glad it didn't.

[Mike_B03]

A bounced check isn't going to appear on your credit report. The lender would only know about it if they ask you for bank statements and they notice them on there.

It shouldn't be a problem in your situation, that is a pefect example of writing a letter to explain what happened and it shows it's not a regular occurance.