Does Opening A Checking Account Affect Your Credit Score? (2024)

If you’re trying to improve your credit score, it makes sense to consider how your financial accounts—including checking accounts—could affect your credit.

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.

Do Checking Accounts Affect Your Credit Score?

Your credit report includes information about your open or closed credit accounts, such as credit cards, lines of credit, mortgages and other loans. It also shows any accounts that have gone to collections. Finally, it contains information from public records and a list of inquiries from financial companies. Credit reporting companies use the information in your credit report to generate a credit score for you. Checking accounts are not credit accounts, so they don’t ordinarily appear on your credit report or factor into your credit score.

Instead, banks share information about your checking accounts with checking account reporting companies like Chex Systems and Early Warning Services. These companies compile a record of your checking account activity and note potential red flags like suspected fraud or account closures with a negative balance. Banks can pull your checking account report when they consider your application to open a checking account, just like lenders look at your credit report when deciding whether to extend credit to you.

Does Overdraft Protection Affect Your Credit Score?

In some cases, checking account activity can affect your credit score, such as when you sign up for overdraft protection. If you apply for overdraft protection, your bank could make a hard inquiry on your credit. This means the bank checks your credit history because you’ve applied for a credit line. It differs from a soft inquiry, which happens when a lender checks your credit because they want to market a product to you, when a lender you already have a credit account with reviews your file or when you request your own credit report.

Unlike a soft inquiry, a hard inquiry can lower your credit score. A hard inquiry affects a FICO Score for 12 months and typically shaves less than five points off the score. But a hard inquiry can be more detrimental if you have a short credit history, if you have few credit accounts on your record or if you have many hard inquiries within a short span of time.

Once overdraft protection is set up, overdrawing your account can affect your credit score if you don’t replenish the funds and pay the overdraft fees. Your bank could send your overdue payment to a collections agency, and the collections agency would report your unpaid debt to the credit bureaus.

Having a debt in collections can significantly lower your credit score. According to the Consumer Finance Protection Bureau, if your FICO Score is 680, it could take a hit of 45 to 65 points. If your score is 780, it could fall by 105 to 125 points.

An account that goes to collections stays on your credit report for seven years, although its effect on your score decreases as the years go by.

If the amount in collections is under $100, more recent versions of the FICO Score disregard it.

Does Opening a Checking Account Affect Your Credit Score?

Most of the time, opening a checking account does not affect your credit score. If the bank pulls your credit before opening your account, it will likely make a soft inquiry.

The bank could make a hard inquiry, which would lower your score slightly, but that’s unusual.

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.

The reason your score could go down after closing a credit account is that one of the factors determining your score is your credit utilization ratio, or the amount you owe divided by the amount of credit available to you. 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.

Closing a checking account with a negative balance could hurt your score if you don’t promptly pay the bank what you owe. In that case, the bank could hand the debt off to a collections agency, which may notify the credit reporting companies.

Can You Use a Checking Account to Raise Your Credit Score?

Your checking account activity can contribute to your credit score if you sign up for an opt-in credit reporting service like Experian Boost or UltraFICO®. These programs allow you to connect your checking accounts and share information about your payments and balances.

You can sign up for Experian Boost on its website by providing the last four digits of your Social Security number and your mobile phone number.

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.

To benefit, you have to qualify for a FICO Score by having a credit account that’s been open for six months or more and at least one credit account that was reported to the credit bureaus in the last six months. And you can’t be recorded as deceased by the credit bureaus.

If you don’t have enough credit history to generate a FICO Score, and if you’re invited by a participating lender, you could use UltraFICO®. This program uses factors like the age of your checking account, whether you regularly have a positive balance, how much money you have in your account and how often you use your account to create an UltraFICO® score. This is an alternative credit score that lenders can consider when evaluating your application for credit.

A checking account can affect your credit score positively if you sign up for an opt-in credit reporting program, or it can harm your score if you don’t pay your overdrafts or fees. Otherwise, opening, closing or using your account typically won’t affect your score either way. Paying bills by the due date, using 30% or less of your available credit and limiting applications for new credit accounts are generally more important for raising your credit score.