Your bank accounts don't affect your credit score, but they still play a vital role in getting credit (2024)

Your bank account information doesn't show up on your credit report, nor does it impact your credit score. Yet lenders use information about your checking, savings and assets to determine whether you have the capacity to take on more debt.

When applying for loans and/or credit cards, lenders first look at your credit score and credit report to see your open and closed credit accounts and loans, as well as details about your payment history. From this, they can also tell how much available credit you have, how much you're using, if you've had anydebtgo to collections and the number of soft or hard inquirieson your account within the past two years.

But the credit report leaves out some important data: According to Experian, "information about assets such as checking account balances, savings account balances, certificates of deposit, individual retirement accounts, stocks, bonds or other investments" are not listed in your credit profile.

This is where your bank statements come into play.

Below, Selectexplains why getting your bank account information in order can help you the next time you apply for credit.

Why lenders might ask for more information

Banks and lenders look at everything from your car loan to your mortgagewhen you apply for new creditbecause they need to assess your capacity to pay your bills.

While this is standard with mortgage lending, auto lending and sometimes even personal loans, it might also come up when you apply for a new credit card. Because of the high unemployment rate and general economic uncertainty, card issuers are tightening requirements on credit card approvals and looking at your income documentation as well as your credit score to see if you qualify.

What information lenders will ask for

When applying for a loan, a mortgage or a credit card, lenders will ask foryour salary and incomebecause these metrics measure how much money you have, or your capacity to make monthly payments. They may want to see proof such as recent pay stubs, tax returns, W-2 forms, direct deposit and/or bank statements.

For a sizable loan like a home mortgage or business loan, lenders will take a closer look at a borrower's assets. These assets can include your cash, such as your checking accounts, savings accounts and CDs. They can also include investment assets, like your retirement accounts, stocks and bonds. Properties and material assets might also be taken into consideration, and you'll need to show documentation of the appraised valueif you're planning to use them as collateral.

How lenders assess what a good candidate is

A lender or card issuer will assess how reliable you are as a potential borrower by looking atthe overall picture: your credit history, your credit score, your income and your various cash and investment assets. A low debt-to-income ratio and a history of steady paychecks will help your case in getting approved for new credit because they demonstrate both your capacity to take on debt and the likelihood that you will repay it. Lenders look for expenses like monthly housing payments and the total of your minimum payments across all accounts to get an idea of how much you owe every month, versus what you bring in.

If you are looking to apply for a credit card but unsure how your income stacks up, consider a secured credit card. Those with less-than-stellar credit and inconsistent income could have a better chance of qualifying for these cards because they have more flexible income requirements. With a secured card, you put down a refundable deposit upfront, which acts as your credit limit, and youbuild your credit scoreby paying your balances off on time and in full.

Some of Select's top picks for secured credit cards are below.

Bottom line

When it comes to applying for new credit, your credit history and credit score are definitely important but they make up just one factor of your application.

To show lenders that you have the ability to repay your debt, be prepared when you apply for a new loan or credit card. Have these financial resources ready to go and know your credit score going in. Doing so canopen access to credit and put you on a path to a healthy financial future.

Don't miss:7 common fees of checking accounts and how to avoid them

Information about thePlatinum Secured Mastercard®,DCU Visa® Platinum Secured Credit Card, and SDFCU Savings Secured Visa Platinum Cardhas been collected independently by Select and has not been reviewed or provided by the issuer of the card prior to publication.

Editorial Note: Opinions, analyses, reviews or recommendations expressed in this article are those of the Select editorial staff’s alone, and have not been reviewed, approved or otherwise endorsed by any third party.

Your bank accounts don't affect your credit score, but they still play a vital role in getting credit (2024)

FAQs

Your bank accounts don't affect your credit score, but they still play a vital role in getting credit? ›

Your bank account information doesn't show up on your credit report, nor does it impact your credit score. Yet lenders use information about your checking, savings and assets to determine whether you have the capacity to take on more debt.

Does your bank account affect your credit score? ›

Your checking account usually has no impact on your credit score. Normal day-to-day use of your checking account, such as making deposits, writing checks, withdrawing funds, or transferring money to other accounts, does not appear on your credit report.

Does applying for a bank account affect credit score? ›

If possible, you should avoid or minimise these to keep your score as high as possible: Frequently setting up new accounts. Opening a new bank account should only lower your credit score temporarily – but if you do it too often, your score won't have time to recover. Being close to your credit limit.

Does joining bank accounts affect credit score? ›

Checking account balances don't appear on your credit report and checking accounts don't directly factor into calculating your credit score. However, if problems managing your joint checking account cause missed credit card or loan payments, or credit card overuse, those issues will affect your credit.

What does and doesn't affect your credit score? ›

Interest rates and annual percentage rates (APRs) on your credit accounts aren't factors used to calculate credit scores, but late or missed payments on those accounts can hurt your credit scores.

Can having a bank account build credit? ›

Do Bank Accounts Help You Build Credit? For the most part, bank accounts don't help you build credit, because deposit accounts—which include checking, savings, certificates of deposit and money market accounts—are not reported as accounts to the credit bureaus.

Can the bank give me my credit score? ›

Your bank or credit union.

Some banks and credit unions offer credit scores free for customers through online banking sites and/or mobile apps. However, the credit score a bank or credit union shows its customers may not be the same score the bank or credit union uses to make lending or other decisions.

Can lenders see all your bank accounts? ›

Your lender may also want to see that you have at least a few months' worth of mortgage payments in reserve funds. That's so they can be sure you'll be able to make your payments if you suffer a financial setback, like a job loss. They'll likely check all of your bank accounts during this process.

Which bank account does not show on a credit report? ›

Your savings account balance does not appear on a credit report. Anyone checking your report cannot tell how much money you've deposited, withdrawn, or currently have in your account. Therefore, putting money in or taking funds out of a savings account does not influence your credit score.

Does opening a Chase checking account affect your credit? ›

Unlike opening a credit card account, which requires the card issuer to run a "hard inquiry" that temporarily hurts your score, opening up a bank account does not affect credit score.

What hurts credit score the most? ›

1. Payment History: 35% Making debt payments on time every month benefits your credit scores more than any other single factor—and just one payment made 30 days late can do significant harm to your scores. An account sent to collections, a foreclosure or a bankruptcy can have even deeper, longer-lasting consequences.

Can I get my credit score without affecting it? ›

Good news: Credit scores aren't impacted by checking your own credit reports or credit scores. In fact, regularly checking your credit reports and credit scores is an important way to ensure your personal and account information is correct, and may help detect signs of potential identity theft.

What is the best reason to use cash? ›

6 Reasons Why Using Cash Is Better Than Credit
  • Accrued interest adds up on credit cards. ...
  • Paying with cash vs. ...
  • Cash makes it easier to budget and stick to it. ...
  • You avoid additional fees. ...
  • Not all vendors accept credit cards. ...
  • Your personal information is protected.

What affects your credit score the most? ›

1. Payment History: 35% Making debt payments on time every month benefits your credit scores more than any other single factor—and just one payment made 30 days late can do significant harm to your scores. An account sent to collections, a foreclosure or a bankruptcy can have even deeper, longer-lasting consequences.

Does closing an old bank account affect credit score? ›

Generally, closing a bank account doesn't affect your credit

The Consumer Financial Protection Bureau confirms that the three major credit bureaus — Experian, Equifax and TransUnion — don't typically include checking account history in their credit reports.

Do I have a credit score if I have a debit card? ›

When you use your debit card, your money is withdrawn directly from your checking account. But since debit cards are not a form of credit, your debit card activity does not get reported to the credit bureaus, and it will never show up on your credit report or influence your score in any way.

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