Does Opening Many Bank Accounts Hurt My Credit Score?

Consumers often fret about the seemingly mysterious calculations involved with determining a credit score. Facts, myths and misconceptions frequently occur when it comes to theories about how credit scores are calculated. It's key to understand what actions hurt your credit score so you can continue working toward a higher score. Some people may find that they have accumulated numerous bank accounts over the years, and it is important to understand the impacts of many bank accounts on credit scores.

Determination

In general, your credit score reflects several factors comprising your credit history. About 35 percent of your credit score comes from your payment history, according to myFICO.com. About 30 percent of your credit score comes from the amount owed; if your income-to-debt ratio is skewed because you owe lots of money compared to money earned, this will lead to a lower credit score. The length of your credit history makes up 15 percent of your credit score; if you have long-term relationships with lenders, this is seen as a good sign. New credit, on the other hand, makes up 10 percent of your credit history and reflects the length of time since you've last opened an account. And 10 percent includes the types of credit used; home mortgages and student loan debt is preferred over credit card debt.

Bank Accounts

Although credit applications frequently ask whether or not you have a checking or savings account, the fact of having one or seven bank accounts does not affect your credit score. Checking and savings accounts don't show up on your credit report, so there's little to no chance that opening many bank accounts over the years will hurt your credit score.

Bouncing Checks

This doesn't mean that it's impossible for bank accounts to hurt your credit score, however. There are several ways a bank account can ding your credit score. For example, if you bounce a check and don't repay the bank, the money owed could be transferred to a collections agency, which can report the delinquency and hurt your credit score. Unpaid bounced checks can remain on the banking version of a credit check (called Chex Systems) resulting in banks denying you the option of opening a new account.

Overdrafts

If you've applied for a bank account offering overdraft protection (which acts as a mini-loan fronted by the bank to cover purchases exceeding your account balance) then banks may check your credit history before approving your account application. "Soft" inquiries don't affect your credit score, but multiple "hard" inquiries into your credit history in a short amount of time make it appear that you're hard up for new credit---a red flag to lenders that can hurt your credit score. You're better off not opening numerous bank accounts at the same time, or inquiring whether they'll be completing soft or hard checks into your credit history.