Does Having Too Many Bank Accounts Hurt Your Credit Score?

Mar 27, 2017 | 2 Comments

As the ups and downs of life send you on a financial roller coaster, you could find yourself with many bank accounts to your name. You may have been forced to relocate and open a local account for a job, you might be chasing high rates on savings accounts or opening accounts for cash bonuses. Before you know it, you're receiving statements for bank accounts that have become obsolete.

Due to increased awareness of financial literacy brought upon by the recession, bank customers have shown mounting concerns over their financial footprints. Credit has become a top priority in recent years. If you happen to have many bank accounts, you might worry if they will have any negative effect on your credit score.

Quick answer: Credit scores are not affected by the number of bank accounts in your name.

How Credit Scores Work

Generally, your credit score is not directly tied to bank accounts. Regular bank activity will have little effect on your credit score because credit scores are based on data on your credit report. Your credit report does not record information regarding your banking activity in the same manner that it keeps information on your credit cards, student loans, mortgages, and other debt obligations.

Taking a look at the FICO score, the most commonly used credit scoring model, you'll see that banking activity is not relevant:

FICO Credit Score Factors and Their Percentages

FICO credit score factors Percentage weight on credit score: What it means:
Payment history 35% Your track record when it comes to making (at least) the minimum payment by the due date.
Amounts owed 30% How much of your borrowing potential is actually being used. Determined by dividing total debt by total credit limits.
Length of credit history 15% The average age of your active credit lines. Longer histories tend to show responsibility with credit.
Credit mix 10% The different types of active credit lines that you handle (e.g., mortgage, credit cards, students loans, etc.)
New credit 10% The new lines of credit that you've requested. New credit applications tend to hurt you score temporarily.

However, be mindful that there is an odd chance that your bank accounts can affect your credit score.

Bank Accounts And Your Credit

There are two notable instances in which your bank accounts could hurt your credit score.

The first instance is when you open your bank account, which could result in a hard pull on your credit report if the bank requires it. This could give your credit score a small ding. If you open new bank accounts at multiple banks within a short period, you could do some substantial short-term damage to your credit score if more than one of these institutions pull your credit report.

The second instance could occur if you allow your account to reach a negative balance. This situation could occur when you overdraw your account or monthly account maintenance fees wipe out your account balance. If your bank accounts are left in negative territory for long period of time, the bank could send your account to a collections agency in an attempt to retrieve the amount owed. It would make a huge black mark on your credit report and your credit score.

Other than the two situations mentioned above, having an overabundance of bank accounts should have relatively little to no effect on your credit score if you keep the accounts in good standing.

Financial Cleanup

A multitude of bank accounts doesn’t necessary bode well for your financial health. The wise move would be to officially close any bank accounts that you’ve abandoned because you’ll never know when you or the bank could trigger a transaction or fee. Most likely, you won’t be aware of it and be surprised to find that your credit score has taken a dive.

Consolidate your accounts by transferring any remaining balances from neglected bank accounts. Banks will not close an account until there is a zero balance so even a few cents in an account can prevent the account from closing. Some banks have begun closing accounts that are inactive for a certain period of time. In any case, request written confirmation that your account is closed.

Did you enjoy this article? Yes No
Oops! What was wrong? Please let us know.

Ask a Question

alfonsosylvesterbowensjr
Wednesday, 05 Apr 2017 1:56 PM
<p>I been doijg this for about 12 years. I have 8 accounts i actively use. Virtual budgeting just doesnt work for me. And with mobile depositing i can budget to my sub accounts in minutes. So yes this process does work. And it also gives you great flexibilty in building bank relationships, because you have multiple options, vs jist having one bank account. Just keep a secure list so incase of death your family will know how your financial structure is setup. </p>
sammyvillarreal
Wednesday, 10 Aug 2011 6:13 AM
<p>I've always wanted to be able to have 1 regular checking account, but be able to create "sub accounts/buckets" or some way to allocate that money into each different "sub account/bucket". Each "sub account/bucket" would be for a different bill.  For example, I would create one for "Car 1", "Car 2", "Rent/Mortgage", "Utilities", "Groceries", "Fuel", etc.</p><p>And I know this is probably counter intuitive, but having a separate account, with separate card to use, would allow me to allocate my available funds in each "sub account/bucket", allowing me to see the amount of money available in each account and make sure I'm covered.</p><p>Sounds overlycomplicated, but I've never liked having all of my money in 1 account and budgeting from there. Part of that is my lack of budget discipline.  There's gotta be a better way.</p><p>My credit union(Navy Federal) just recently added a cool little feature to create "Nicknames" for each account I have with them. I'm seriously considering opening a few more checking accounts and doing what I just described above. So long as I have at least $5 in each account, I won't incur any monthly fees... and of course not overdrafting.</p>