Do Bank Accounts Affect Credit Scores?

Many people worry that closing a bank account, changing banks or other banking activities might negatively affect your credit score. They will be comforted to know that banking behavior does not affect your credit score. It does however have other affects on your financial life of which you should be aware before making any decisions about your account.

Opening or closing a bank account does not have any effect on your credit score. The agencies that report your credit get their information from public records and your relationships with creditors. So while defaulting on debts, late payments, bankruptcies and other public judgments can affect your score, your banking behavior does not. If you bounce a check, the party to whom you wrote the check may report you to a credit agency if you don’t correct the situation, but the banking institution will not.

Your banking behavior is tracked however. Bounced checks for example may be reported to agencies that are used by other companies like insurers, wireless providers and payday loan companies. Additionally there are in fact consumer reports that do track your banking history. 

ChexSystems is the most widely used report and these reports are in many ways similar to a credit report.   You can dispute them just like a credit report and you are entitled to one free copy per year just like a credit report. Negative information stays on these accounts for five years.

The most common use of this system is by banks that are trying to determine whether they want you as a customer. Switching banks frequently may count against you in opening a new account, as it may appear you’re simply trying to accumulate “sign up bonuses,” and not maintain a relationship with the bank. 

Ultimately this report makes the distinction somewhat meaningless. While not all lenders will look at this report to decide your creditworthiness, some may. So while opening and closing bank accounts may not be reflected on your credit score, risky banking behavior may affect your ability to get credit.