Generally, your savings account will not affect your credit score. Even when you don’t have sufficient credit history to generate a credit score or you have poor credit, you can still open a savings account.
The reason your credit score doesn’t impact your savings is because you’re not borrowing money from a financial institution and therefore your account activity isn’t reported to credit bureaus. With that said, you can misuse your savings account in ways that can still show up on your credit report.
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Key Takeaways
- Banks don’t report savings account activity to credit bureaus.
- They may run a soft credit check when you apply for a savings account to verify your identity or previous banking history.
- Your savings account has little impact on your credit score, unless you misuse it.
Does opening a savings account require a credit check?
Banks typically don’t require a credit screening when you apply for a new savings account. Creditworthiness is not a consideration for them because they’re not lending any money, but rather acting as custodians for your deposits. Unlike installment credit, mortgage loans, or revolving credit lines, the activity in your savings account isn’t reported to credit agencies.
Banks may sometimes conduct a soft credit inquiry during the application process to verify your identity or check your banking history, but this soft hit will not impact your credit score.
However, if you’re applying for overdraft protection on your savings account, banks may look at your credit history because overdraft is considered a type of credit.
Do savings accounts affect your credit score?
The way you manage your savings account can impact your credit score. You must, therefore, avoid the below instances of financial misconduct that may cause negative entries to appear on your credit report and put a dent in your score.
1. Failure to pay necessary account fees
Bank transactions and saving account balances don’t affect your credit score. It’s the unpaid bank fees or penalties – maintenance fees or transaction fees – turned over to collection agencies that could appear on your credit report and hurt your credit score.
2. Misusing overdraft privileges
With overdraft protection, you’re covered in a transaction where you have insufficient funds. You could damage your credit score if you frequently make multiple payments over your account balance or fail to pay back the overdraft fees and what you owe within the stipulated time frame.
3. Closing account with unpaid fees or negative balance
If you abandon an account that’s overdrawn or has negative information associated with it, such as fraud, unpaid bank fees, or bad cheques (also called non-sufficient funds or NSF), your bank or credit union could turn the amount you owe over to a collection agency. Such agencies typically report their accounts to credit bureaus and it will remain on your credit report for several years.
Your savings account probably doesn’t affect your credit score
Opening a personal savings account is pretty straightforward and having one doesn’t directly influence your credit score if you keep your account in good standing. If you still have questions about your bank account and credit score, contact your bank for more information.
Do you have any experiences with building your own credit and/or opening a bank account? Feel free to share in the comments below.
FAQ
Can I open a savings account with no credit score?
No matter where you open an account – a traditional bank, credit union, or online bank, your credit score is unlikely to prevent you from opening a basic savings account.
Do banks run a credit check for savings accounts?
Banks and credit unions typically do a soft pull when considering your application, which should not linger on your credit report or lower your score. It’s the financial mishandling of the account, such as overdraft misuses, unpaid fees, or closing an account with negative information, that may impact your credit score.
Can I get declined for a savings account?
Opening a savings account is simple and straightforward, but you can still be denied if the bank is unable to verify your identity or if you have a suspicious banking history.
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