Does Account Protection Affect a Credit Rating?

Whether it's protection against identity fraud, or a buffer in case you go over your spending limit, account protection can save you from hefty fees and the headache of clearing your name. Some forms of account protection can potentially save your credit rating, while a few may cost you points if they involve a credit check.

Considerations

Account protection can only affect your credit rating if it comes with a loan or a credit check. The most common type of protection that could affect your credit rating is overdraft protection. Banks usually perform a credit check when you request this protection, because the provider has to authorize a small loan that must be paid back in case you spend more than you have in your account.

Security Features That Won't Cause Harm

Credit monitoring does not affect your credit rating even though a third-party pulls your report, because the credit rating agencies consider this type of service a personal pull. Security for your credit card account, such as adding a photo ID to a card or monitoring your purchases online, does not affect your credit. Temporary purchase numbers, which are one-time-use cards for a purchase, are linked to your account, so they are not a new revolving loan nor reported to the credit agencies.

Potential Benefit

Some forms of account protection may guard against actions that could harm your score or creditworthiness. Overdrafting on a bank account, for instance, could result in the bank sending the outstanding balance to a collection agency or noting a negative item on your banking history report. Identity thieves can destroy your credit score by taking out loans in your name and letting them default. It takes the average victim 14 months to find out about identity theft -- plenty of time to ruin your name, according to the New York State Consumer Protection Board.

Tip

Just to be sure, always ask your creditor if account protection requires a credit check or how it will show up on a credit report. On overdraft protection, you can forgo the credit check by linking other accounts. This way, when you go over your balance on one account, the bank takes funds from another.