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It makes sense to think about how your financial accounts, including checking accounts, could effect your credit if you’re trying to raise your credit score.
Ordinarily, checking accounts don’t show up in your credit history or impact your score. But checking account activity can still affect your credit in certain situations.
The Short Answer: No, it usually doesn’t.
Opening a checking or savings account typically won’t directly impact your credit score. That’s because banks and credit unions usually perform a “soft pull” on your credit report when you apply for an account. This type of inquiry doesn’t affect your score. However, there are a few things to keep in mind:
The “Soft Pull” vs. the “Hard Pull”
When you apply for credit, like a loan or credit card, lenders typically perform a “hard pull” on your credit report This type of inquiry is visible to other lenders and can temporarily lower your credit score by a few points.
However, when you apply for a bank account, the bank or credit union usually performs a “soft pull.” This type of inquiry is not visible to other lenders and doesn’t affect your credit score.
ChexSystems: Your Banking History Report
While opening a bank account won’t directly impact your credit score, it can indirectly affect it through your ChexSystems report. ChexSystems is a reporting agency that tracks your banking history, similar to how credit bureaus track your credit history
When you apply for a bank account, the bank or credit union may check your ChexSystems report. This report includes information about your past banking activity, such as:
- Unpaid negative balances (from overdrafting)
- Frequent overdraft fees
- Bounced checks
- Suspected fraud
If your ChexSystems report contains negative information, it could lead to your application being denied. This denial could then be reported to a credit bureau, potentially lowering your credit score.
What to Do If You’re Concerned About Your ChexSystems Report
If you’re concerned about your ChexSystems report, you can request a free copy of it once every 12 months. You can do this by visiting the ChexSystems website or calling 800-428-9623.
If your ChexSystems report contains negative information, you can try to dispute it. You can also try to improve your ChexSystems report by opening a secured credit card or becoming an authorized user on someone else’s credit card.
In most cases, opening a bank account won’t directly impact your credit score. However, it’s important to be aware of your ChexSystems report and how it could indirectly affect your credit score. If you’re concerned about your ChexSystems report, you can request a free copy of it and take steps to improve it.
Frequently Asked Questions
Q: What is a “soft pull” and how does it differ from a “hard pull”?
A: A “soft pull” is a type of credit inquiry that doesn’t affect your credit score. It is typically used by banks and credit unions when you apply for a bank account or other non-credit product. A “hard pull” is a type of credit inquiry that does affect your credit score. It is typically used by lenders when you apply for credit, such as a loan or credit card.
Q: What is ChexSystems and how does it affect my credit score?
A: ChexSystems is a reporting agency that tracks your banking history. When you apply for a bank account, the bank or credit union may check your ChexSystems report. If your ChexSystems report contains negative information, it could lead to your application being denied. This denial could then be reported to a credit bureau, potentially lowering your credit score.
Q: How can I improve my ChexSystems report?
A: You can improve your ChexSystems report by opening a secured credit card or becoming an authorized user on someone else’s credit card. You can also try to dispute any negative information on your ChexSystems report.
Additional Resources
Opening a bank account usually won’t directly impact your credit score. However, it’s important to be aware of your ChexSystems report and how it could indirectly affect your credit score. If you’re concerned about your ChexSystems report, you can request a free copy of it and take steps to improve it.
Can You Use a Checking Account to Raise Your Credit Score?
Should you choose to subscribe to an opt-in credit reporting service such as Experian Boost or UltraFICO®, your checking account activity may be factored into your credit score. These programs allow you to connect your checking accounts and share information about your payments and balances.
By entering your mobile number and the last four digits of your Social Security number, you can register for Experian Boost on their website.
This program looks for bills that you repeatedly pay on time. Paying for your phone, internet, video streaming or utilities counts, and so does making rent payments online. Experian Boost adds this payment history to your Experian credit file, potentially lifting your FICO Score.
In order to reap the benefits, you must meet the requirements for a FICO Score, which include having at least one credit account that has been reported to the credit bureaus within the last six months and one that has been open for at least six months. And you can’t be recorded as deceased by the credit bureaus.
If a participating lender extends an invitation to you and you don’t have enough credit history to calculate a FICO Score, you can use UltraFICO®. This program generates an UltraFICO® score based on variables such as the length of time your checking account has been open, whether you typically have a positive balance, the amount of money in your account, and the frequency of your account usage. This is an alternative credit score that lenders can consider when evaluating your application for credit.
If you enroll in an opt-in credit reporting program, a checking account may improve your credit score; otherwise, it may lower your score if you fail to pay overdraft fees or other charges. Otherwise, opening, closing or using your account typically won’t affect your score either way. Paying your bills on time, making use of all or most of your available credit, and limiting the number of applications you submit for new credit accounts are all generally more significant factors in improving your credit score.
Does Closing a Checking Account Affect Your Credit Score?
While closing a credit account can hurt your credit score, closing a checking account typically has no effect.
Your credit utilization ratio—that is, the amount of debt divided by the total amount of credit you have access to—is one of the factors that determines your score, which is why it could decrease after you close a credit account. A lower credit utilization ratio is better. Closing a credit account decreases your available credit and raises your credit utilization ratio. But closing a checking account doesn’t affect your credit utilization.
If you don’t pay the bank what you owe them right away, closing a checking account with a negative balance may lower your credit score. The bank might then assign the debt to a collections agency, which might then let the credit reporting companies know.