Will Checking Account Overdraft Protection be Reported to CRA's?

[Anonymous]

I just reactivated a dormant checking account which had a $1,000 line of credit attached to it.   Will this be reported to CRA"s and so included in calculations of my total credit utilization?  

(Important to me as I'm trying to choose just the right time to apply for a 0% balance transfer card.)

[Anonymous]

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@Anonymous wrote:

I just reactivated a dormant checking account which had a $1,000 line of credit attached to it.   Will this be reported to CRA"s and so included in calculations of my total credit utilization?  

(Important to me as I'm trying to choose just the right time to apply for a 0% balance transfer card.)

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We have no way of knowing with the info you provided.  It all depends on the individual bank and their reporting policies..  Most LoCs that are reported are done so as revolving credit that does affect your overall utilization.

[Anonymous]

No.  Overdraft protection is not credit, in the usual sense.

Overdraft protection is a promise from your bank to cover you - for a fee - if you overdraw your account.  Payment will be taken from future funds deposited, or from a savings account, until you are paid off (back to a positive balance).  It is neither revolving debt nor installment debt, which are the types considered on your credit report.  It will not count as part of your available credit, and if you use any of it that will not count as usage against your available credit for the same reason - it isn't reported.

A person who abuses this, and who overdraws an account and fails to pay it back, is the only type who sill see impact from it on their credit report - in the form of a chargeoff from the bank reporting as a collection/delinquency.   Those who just use it as a safety net have no reporting impact from it.

[Anonymous]

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@Anonymous wrote:

No.  Overdraft protection is not credit, in the usual sense.

Overdraft protection is a promise from your bank to cover you - for a fee - if you overdraw your account.  Payment will be taken from future funds deposited, or from a savings account, until you are paid off (back to a positive balance).  It is neither revolving debt nor installment debt, which are the types considered on your credit report.  It will not count as part of your available credit, and if you use any of it that will not count as usage against your available credit for the same reason - it isn't reported.

A person who abuses this, and who overdraws an account and fails to pay it back, is the only type who sill see impact from it on their credit report - in the form of a chargeoff from the bank reporting as a collection/delinquency.   Those who just use it as a safety net have no reporting impact from it.

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While you partially right a lot of banks and credit unions do use LoCs as overdraft protection and if he has a specific line of $1K then it probably is/will be reported on his credit reports regardless of usage.  What you're describing is a savings account acting as overdraft protection and that wouldn't have a set amount.  So yes in his case it probably will count as revolving credit.

[Anonymous]

Given that it has a specific credit limit, along with a specific interest rate attached to it (11.5%), it does seem more like revolving credit  (with advantage that you only pay interest on the days checking account has negative balance, which is nice).

[Anonymous]

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@Anonymous wrote:

Given that it has a specific credit limit, along with a specific interest rate attached to it (11.5%), it does seem more like revolving credit  (with advantage that you only pay interest on the days checking account has negative balance, which is nice).

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It is revolving credit, no doubt about that.  The only unknown is whether your bank reports that to the CRAs.  Only way to know for sure is tell us which bank and maybe someone else uses same bank or call and ask the bank.

[Anonymous]

Capital One (line of credit was grandfathered in since it initially was attached to an account from Ing Bank, which Capital One acquired).

[Anonymous]

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@Anonymous wrote:

Capital One (line of credit was grandfathered in since it initially was attached to an account from Ing Bank, which Capital One acquired).

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Hopefully someone will know. If I had to guess I would think that it would report.

[Anonymous]

since you gave an exact amount, I am pretty sure it's as they mentioned - the "overdraft protection" is actually a line of credit attached to the checking account. I have the same thing with my CU.

It is a PLOC with it's own APR, etc and automatically gets used if I were to ever withdraw more funds than exist in my checking (not that it ever happens now that I understand how to manage money and credit). Absolutely shows up on my credit reports though.

[Ghoshida]

This is specific to Capital One 360, previously ING.

They have an overdraft protection line with a pre-specified APR and credit line.

They also verify your credit report to open the account.

In my case, it was EQ.

However, as a policy, they don't report this line to the credit bureaus. In the past, I have used this line for a few days each time. Still didn't report. I contacted them with this query and they stated that the policy is to only check the credit report, not report to them.

Other banks and CUs may follow a different policy.