Does Closing a Bank Account Affect Your Credit Score
One of the most common questions that often people ask is whether closing a bank account can hurt their credit score.
Well, the good news is that closing a bank account while standing in a good position won’t affect your credit score. But closing a bank account in a negative balance can adversely affect your credit score.
Are you intrigued to discover the answer to the query does closing a bank account hurt your credit? You are at the right place. This post will give you an insight into it. Continue reading it.
Does Closing a Bank Account Hurt Your Credit,
Well, closing a bank account won’t directly influence your credit score, but it may cause difficulties and affect your credit score when it has been closed with a bank account having a negative balance. Here is some important facts to know about how close a bank account can impact your Credit Score/
For instance, when you overdraw a bank account, your credit union may pay for the transaction and impose additional fees on you. If you are unable to deposit the amount to cover that transaction and the additional fees, your financial institution may send the remaining balance to third-party agencies which can then report to the three credit bureaus. If the overdraw of your bank account is mentioned in your credit report, it can drag down your score and stay on your report for up to 7 years.
How to Safely Close Your Bank Account.
You must be intrigued to know does closing a savings account affects credit.
Before closing your bank account, it is necessary to contact your bank or credit union to ensure, you don’t have any negative balance. Also, check whether any outstanding cheques or pending transactions that may bring your account in a negative balance or can hit the account you have closed.
To switch your banking services to another financial institution, you can switch your deposits and transactions to the new account, but don’t forget to leave some money on the old account, you are going to close for a week or two. Once confirmed, your transactions are transferred to your new account and then
Once the credit union notifies you that your closed account still has a negative balance, then you can make it a priority to take care quickly to avoid any inconvenience in the future.
Final Word
To calculate your credit score, your checking or savings account activity like deposits and withdrawals, so, no need to worry about the impact on your credit score when shifting your bank account. Credit-related activities like borrowing, and repaying debt can affect your credit score.
If your bank account has had zero activity for years, closing it will be good as an inactive account may not yield much and become unclaimed or government property.
Moreover, closing a bank account with a negative balance can indirectly affect your credit score
Since, closing your Bank account won’t affect your credit score directly, monitoring your credit regularly helps develop and maintain good financial health.