Let’s get straight to the point: Opening a bank account does not impact your credit score! Usually, lenders check your credit score when applying for a loan to ensure you can make the monthly payments on time and take on debt.
When you apply for a credit card, the lender peeks into your payment history and credit report to find out the following:
- How many closed or open credit accounts do you have.
- Are you currently paying off a loan?
- How much credit are you using.
- Your DTI.
- How many hard or soft inquiries have been made on your account in the last two years?
The inquiry does not cover your assets, savings account balances, individual retirement accounts, certificates of deposit, stocks, bonds, etc. When you apply for a new loan, your credit score takes a minor hit.
The lender will not approve your request just like that! They want to ensure that you will pay the money on time, so they make a hard inquiry into your credit report. This reduces your credit score by 10 points.
Soft Inquiry vs. Hard Inquiry
As mentioned earlier, a soft inquiry is made when opening a checking or savings account and a hard one when applying for a credit card or loan. In the former situation, you are simply asking for a place where you can keep your money.
Your savings will appreciate over time, allowing you to invest in a lucrative venture. A soft inquiry does not hurt your credit score because it does involve looking into your credit report.
On the other hand, in the latter situation, the lender dives deep into your credit history to determine your payment patterns. Hence, financial experts recommend not applying for multiple credit cards.
If you have a credit score of 620, even the smallest drop can lower your chances of getting a low-interest rate. In some cases, the lender might deny your application because he does not find you reliable. If he approves your application, chances are you won’t get ideal loan terms.
Opening A Bank Account
When you apply to open a bank account, your previous accounts’ history is checked by ChexSystems. A report from ChexSystems looks at two things: Checking account history and savings to find out about unpaid negative balances, bounced checks, frequent overdraft fees, and instances of fraud.
The good news is that getting a ChexSystems report does not affect your credit score. It can help you find problems in your finances. Any negative marking on this report can result in your application being rejected.
Final Notes
In conclusion, a soft inquiry into your checking account history does not impact your credit score. So, go ahead and submit your application to open a bank account.
Remember: If you are closing your precious bank account, ensure it does not have a negative balance. If you fail to pay off the balance, it will be sent to a collections agency. As a result, the debt will come under the notice of a credit bureau, affecting your credit score.
