Does Opening a Checking Account Affect Your Credit Score?

a woman opening a checking account while sitting by the counter in her kitchen

Post Written by: Integra Credit | November 3 2023

Opening a checking account is one of the first steps toward responsibly managing your finances. If you are considering a checking account, savings account, or both, you may wonder how opening a bank account can impact your credit. Specifically, does opening a checking account affect your credit score at all? While the answer is no, mismanagement of your checking or savings account can have negative credit implications.

Does Opening a Checking Account Affect Credit Score?

Opening a checking account is a relatively routine and straightforward process that should not impact your credit score. While opening a credit card or loan involves issuing credit, deposit accounts do not. Deposit products include checking accounts, savings accounts, certificates of deposit (CDs), money market accounts, etc. When you open a checking account or deposit account, the bank usually does not report the account or account activity to the credit bureaus—unless there is significant negative activity.

Does Opening a Savings Account Affect Credit Score?

Like a checking account, opening a savings account should not impact your credit score. Even though they do not affect your credit, savings accounts play a fundamental role in your holistic financial health. Saving money can help you achieve your short-term and long-term goals. It can also help establish a safety net and resiliency for unexpected expenses.

Does Opening a Bank Account Affect Credit Score?

Opening a bank account does not affect your credit score. Whether it is a checking account, savings account, money market account, or certificate of deposit, opening these accounts will not affect your credit score. Deposit accounts are not credit or lending products. As such, banks do not report your deposits, withdrawals, or account balances to the credit bureau. The bank does not report the existence of your account to credit bureaus. However, if you misuse the account and it becomes delinquent, it can negatively affect your credit score.

Do Banks Check Your Credit Score?

While every bank can have a different policy for opening checking and savings accounts, many banks will perform a credit check. Instead of a hard credit check that can impact your credit, banks often perform a soft credit check. In addition to the standard credit bureaus—Experian, TransUnion, and Equifax—many banks and credit unions use ChexSystems or a similar credit reporting agency.

What Is ChexSystems?

ChexSystems is a nationwide specialty consumer reporting agency. ChexSystems mainly reports banking information the agency collects about: Bounced checks Overdrafted accounts Involuntary account closure ATM, debit, or account card fraud Identity theft and suspected fraud The number of accounts you've recently applied for If your ChexSystems report shows information that paints you as a risky consumer, the bank may deny you an account. Under the Fair Credit Reporting Act (FCRA), you can receive a free copy of your ChexSystems report once every year.

Hard Credit Inquiry vs. Soft Credit Inquiry

While banks may do a credit check when opening a deposit account, not all credit checks are equal. When you open a checking or savings account, most financial institutions will perform a soft credit inquiry. A soft credit inquiry allows the bank to determine where your credit stands to some degree. Soft inquiries do not impact your credit score, but a hard inquiry does.

Can Overdraft Protection Hurt Your Credit?

Overdraft protection can be a vital feature for preventing your checking account from venturing into the negative, which can lead to expensive overdraft fees, returned items, and more. With overdraft protection, your bank may pay for checks and debit card purchases—even if you do not have enough money. If you do not have overdraft protection services activated, your bank may reject the items and return them. There are several ways banks offer overdraft protection:

Linked deposit account: One option is to automatically transfer funds from a savings account or another checking account to cover purchases that exceed your available balance.
Overdraft line of credit: This type of overdraft protection involves borrowing against an established line of credit to cover checks and debit card purchases that would otherwise overdraw your account.
Linked credit card: You also have the option to connect one of your credit cards to your checking account to act as overdraft protection.
Use the bank's funds: Sometimes, the bank will approve purchases that exceed your available balance, charge your account a fee, and collect their money from your next deposit.

If you use overdraft protection funds from a linked deposit account, it will not hurt your credit score. However, if you use the bank's money or line of credit, it can have an impact on your credit. On one hand, it can increase the balance on your linked credit card or line of credit. Considering the balance on your revolving debt accounts can contribute up to 30% of your credit score, higher balances can have a negative impact.

If you use the bank funds as a form of overdraft protection, it's important to pay the institution back as soon as possible, including:

The amount the bank covers
Any overdraft fees accumulated
Interest charges incurred

If you do not, the financial institution can send your account to a debt collection agency and report the delinquent account to credit bureaus, such as ChexSystems. The net effect can reduce your credit score and prevent you from opening a checking account in the future.

Bottom Line: Use Your Checking Account Responsibly

Checking and savings accounts are fundamental financial tools that can help you achieve your goals. But if you regularly overdraw your checking account, it can lead to negative credit implications.

Sources

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