Does Closing a Checking Account Affect Your Credit Score?

The enactment of closing a slope relationship doesn't straight effect your credit. So, whether you’re switching to a caller financial institution aliases conscionable consolidating your finances, you won’t needfully incur immoderate antagonistic in installments people effects.

However, location are a fewer steps you should return earlier canceling your relationship to guarantee you don’t indirectly wounded your credit. Here’s what to do.

When Closing a Checking Account Could Affect Your Credit

Typical in installments scoring models, for illustration FICO and VantageScore, don’t see your slope accounts erstwhile determining your in installments score. Bank accounts don’t look connected your in installments reports from nan 3 major in installments bureaus.

"A checking relationship does not person immoderate nonstop effect connected a person's in installments people aliases in installments file, because checking accounts are not considered lines of in installments and do not impact borrowing money," explained Michael Collins, a chartered financial expert and laminitis of WinCap Financial. 

However, closing a checking relationship tin indirectly hurt your in installments score successful immoderate cases. For example: 

1. Your relationship was linked to a in installments paper aliases an outstanding loan: Many group usage their checking account’s automatic costs settings to nonstop payments for in installments cards, student loans, and different forms of credit. But if you adjacent your checking relationship earlier mounting up autopay to travel from different account, you mightiness miss a payment. And a azygous missed costs tin importantly impact your in installments people (although creditors typically return astatine slightest 30 days to study a costs arsenic late, truthful you person clip to make it up).
2. The slope closed your relationship because of an unpaid antagonistic balance: If a slope aliases in installments national closes your relationship owed to accordant overdrafts aliases an ongoing negative balance, it whitethorn walk that indebtedness to a indebtedness postulation agency. If that occurs, nan indebtedness collector whitethorn taxable nan outstanding indebtedness to nan in installments bureaus, which will impact your credit. Plus, this delinquency will stay connected your in installments reports for 7 years. 

If a slope aliases in installments national closes your relationship owed to suspected fraudulent activity aliases because of an unpaid antagonistic balance, nan institution will study that accusation to checking relationship study companies for illustration ChexSystems. Negative accusation connected a ChexSystems study doesn’t impact your in installments score, but tin make it difficult to suffice for a caller checking account.

How to Close a Checking Account So Your Credit Isn't Affected

If you've decided to close a checking account, travel these steps to protect your credit.

1. Review your relationship agreement: Before closing an account, reappraisal your deposit relationship statement aliases interest schedule. The statement will outline nan requirements for closing an account, arsenic good arsenic immoderate associated fees. For example, immoderate banks complaint a interest if you adjacent your relationship wrong a fewer months of its opening date. 
2. Make judge your equilibrium is positive: If your relationship is successful nan red, deposit capable to bring it backmost to $0 aliases positive.
3. Check your statements: Review your bank statements from nan past 3 to six months and statement immoderate recurring payments, specified arsenic inferior bills aliases payments connected in installments cards aliases loans. Create a database of immoderate accounts linked to your checking relationship truthful you cognize what to update, specified arsenic your in installments paper company, owe lender, car indebtedness servicer, aliases student indebtedness servicer.
4. Open a caller checking account: Unless you already person different checking account, you’ll astir apt request to unfastened a caller one. Consider your options carefully—some banks connection bonuses for opening a caller account.
5. Update your automatic costs information: Update your costs accusation pinch nan accounts you recovered earlier. Add your caller checking relationship specifications for early payments. While you’re astatine it, update your nonstop deposit accusation pinch your employer truthful your paycheck isn’t delayed, if applicable.
6. Submit your closure request: Some banks let you to adjacent an relationship online, while others require written notification aliases a telephone call. Review your deposit relationship statement to find retired your bank's requirements. 
7. Ask for a written confirmation: Request confirmation that nan relationship has been closed via email aliases postal message for your records. The confirmation tin travel successful useful if location are disputes astir nan slope account's closure date.

Factors That Affect Your Credit Score

There are respective in installments scoring models, but nan FICO score is 1 of nan astir common. It takes nan pursuing factors into account, weighing immoderate much heavy (giving them a bigger effect connected your in installments score). 

• Payment history (35%): The biggest facet affecting your in installments score, your costs history shows creditors whether you've made your past payments connected time. 
• Amounts owed (30%): This facet considers really overmuch of your disposable in installments you use, a measurement known arsenic credit utilization. If you usage a larger percent (by maxing retired your in installments cards, for example), your people tin fall. Creditors interest you whitethorn beryllium overextending yourself—and mightiness person problem paying backmost each of nan debt.
• Length of in installments history (15%): The longer you've had accounts open, connected average, nan amended you’ll do successful this category.
• Credit operation (10%): A operation of in installments accounts is ideal, including revolving credit, loans, and owe debt. However, your in installments operation has a smaller effect connected your in installments people than different factors—you don’t needfully request 1 of each type of indebtedness to person awesome credit. 
• New in installments (10%): Taking connected excessively overmuch caller in installments astatine erstwhile tin trim your score. Creditors whitethorn spot that and beryllium concerned astir your expertise to spend your payments. 

You tin build and improve your credit by making your payments connected time, keeping your in installments paper balances low, and limiting caller in installments applications. 

Frequently Asked Questions (FAQs)

The Bottom Line

If you want to adjacent a checking relationship to debar costly fees aliases to move to a slope that offers much convenience, cognize that closing nan relationship won't straight impact your credit. However, to guarantee location is nary harm to your in installments score, beryllium judge to update each of your automatic costs settings and decently notify nan slope of your desire to adjacent nan account.