Does opening a checking account affect my credit score?

Your credit score can feel like an ever-shifting number that greatly impacts your financial future. But when it comes to checking accounts, things aren’t as complicated as they seem. Let’s clear up the confusion and see what really matters to your credit when opening a new account.

What is a credit score?

Think of a credit score as your financial report card. It’s a three-digit number, typically between 300 and 850, that shows how well you manage your money, including paying bills on time and handling debts. Multiple scoring systems exist, but the FICO credit score (named after the Fair Isaac Corp.) is the most widely used.

When you apply for a home loan, car loan, or credit card, a creditor will check your credit score to help determine whether they want to approve your loan application. The higher your credit score, the better—it means you’re more likely to pay back the loan based on your borrowing and repayment history.

Within the FICO system, you’ll have three credit scores, because there are three credit bureaus—Equifax, Experian, and TransUnion—that calculate your score based on their own processes and information in your credit report.

Don’t worry if the three scores are slightly different—that’s normal.

What goes into a credit score?

How is your credit score calculated? It’s based on five key factors: 

1. Your payment history is 35% of your score, so it’s the most important factor. It shows whether you’ve paid previous debts on time.
2. The total amount you owe is 30% of your credit score. How much credit are you using compared to what’s available to you? The lower the percentage, the better—it shows you’re not maxing out your credit.
3. The length of your credit history accounts for 15% of your score. The longer you’ve had credit, the better.
4. The amount of new credit you have makes up 10% of your credit score. If you’ve opened multiple new credit accounts in a short amount of time, it can make you seem like a bigger risk.
5. Your credit mix is the final 10% of your score. The final variable refers to the different types of credit you have. Having multiple types in good standing—such as a mortgage, a car loan, and a couple of credit cards—can help boost your credit score.

Are checking accounts included in credit reports?

If you’re considering opening a checking account as a safe place to store your money, there’s great news: It won’t impact your credit score. Checking accounts generally don’t count as “credit” because they’re used to manage the money you actually have, rather than borrowed funds. Information from these accounts, including balances and transactions, isn’t used to calculate your credit score. This applies to savings accounts, too.

However, there are still some situations where activity in these accounts could affect your score, so it’s important to be aware of them. Discover® doesn’t charge overdraft fees or report lapses to credit bureaus, but some banks do. With Discover Overdraft Protection, you can link a Discover deposit account so that available funds in a funding account can be automatically used to cover eligible transactions in your protected account that would otherwise be returned unpaid.¹ If an account has unpaid overdraft fees, for example, or if you’ve bounced checks, these issues may go into collections and eventually be reported to credit bureaus, which will negatively impact your score.

Setting up automatic payments for loans or credit cards can be a smart way to avoid late fees and stay on top of your bills. But if your checking account doesn’t have enough funds to cover these payments, the consequences can be serious. If you become delinquent on your loans or credit cards, this can significantly impact your credit score. Monitor your account balance regularly to ensure funds are available for scheduled payments.

Also, future lenders (if you apply for a home loan or car loan, for instance) might look at your checking account and/or savings account information to verify your income and understand your ability to repay a potential loan.

The moral of the story: Don’t stress about your credit score when opening a checking account. Feel free to explore account types to find perks that work for you—but always aim to practice responsible financial habits so they don’t risk impacting your credit score down the road.

Learn more about the benefits of the Discover Cashback Debit checking account today.

¹ See the Overdraft Protection Service Agreement Addendum for restrictions and other details.

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The information provided herein is for informational purposes only and is not intended to be construed as professional advice. Nothing contained in this article shall give rise to, or be construed to give rise to, any obligation or liability whatsoever on the part of Discover Bank or its affiliates.