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What is a Bank Credit Hold Order?
What is a bank credit hold order? Why would the bank report an individual's credit history after closing a bank account? Can the individual open another bank account?
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 That term, "bank credit hold order", in not a familiar one; this may be a regional term or it could mean different things to different banks. Banks report many credit and deposit transactions to credit bureaus for a number of reasons. The customer wants the record to be complete and accurate. Payment histories influence your borrowing ability in the future so you want those good reports to be there. Under the Fair Credit Reporting Act, records do fall off after a given period of time. Those times differ, depending on why the credit report is being reviewed. Older information would be available for an insurance review than a loan request. Banks also report information here as a collection tool. It is not uncommon for a "nuisance balance" of say, $20, to remain unpaid on a checking account. The customer may have had a check come in or a fee accrue before the account was actually closed. The bank will only do so many letters or calls to collect $20, but if this person applies for a loan somewhere, they may be told of this outstanding debt and pay it off to clear the record.
Will it prevent someone from opening a new account? It could. It depends on the policy of the bank where the account is desired. Some banks will not open a new loan or deposit account when there are past due items on a credit report. More banks would limit the products available to this person, perhaps denying them a credit line, loan, or overdraft protection product.
It is best to inquire about negative reports and challenge them when you feel they are incorrect. No bank wants to report information in error. They'll either be able to show why the report is correct, or remove it if it is incorrect.
Published on BankingQuestions.com 9/07/07
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