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Does an overdraft affect my credit score?

Though the lenders consider availing overdraft facilities as a sign of weak financial health, the answer to do overdraft affects credit score Canada is no, except for specific situations.

There comes a time due to many reasons for all to avail of an overdraft facility from the banks. It enables clear a check without money in the checking account but sourced from fixed deposits, credit cards, and others to not return the test.

The bank will avail overdraft fees for such services, and you have to bring the OD or overdraft credit used to zero within the stipulated time to avoid interest and fines. In case of availing the cash from the credit cards, it becomes essential to pay back the credit card payment due in time. And in cases where it is not done in time, it gets passed to the collection agencies, which will inevitably affect the credit score.

The minimum time frame to pay back the availed overdraft amount is 30 days. And the longer the time taken to repay the amount, the more is the damage to the credit score and stays on the credit report for six years. And some of the credit bureaus in Canada are not strict enough to let them remove from the credit report irrespective of technical reasons and the many attempts made for it. Hence, availing an overdraft will not affect the credit score, but not fulfilling its obligations in time may affect the credit score.

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