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Does closing a bank account hurt your credit score?

In general, what happens when you close a bank account has no effect on the account holder's credit score.

There are situations where closing a bank account can affect your credit score, but only if there's a negative account balance (meaning you owe the bank money) or if a bank account closes due to being overdrawn for an extended period. Owing money to the bank and not paying the money back will negatively impact your credit score.
At Credit Union of Southern California (CU SoCal), we make opening a checking account easy!
Call 866.287.6225 today to schedule a no-obligation consultation and learn about our mortgages, home equity lines of credit, auto loans, personal loans, checking and savings accounts, and other banking products. As a full-service financial institution, we look forward to helping you with all your banking needs.

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How are credit scores calculated?

The most widely used credit scores are FICO® scores, which will range between 350 (high risk) and 850 (low risk). Lenders look at your credit score when you apply for a loan and use the risk factor to determine if you are credit worthy.
FICO uses five categories to calculate credit scores. The percentages in the parentheses below reflect how important each of the categories is in determining how your FICO Scores is calculated.
For some people, the importance of these categories can be different. For example, scores for people who have not been using credit for long will be calculated differently than those with a longer credit history. As the information in your credit report changes, so does the evaluation of these factors in determining your FICO Scores.
Payment History (35%). This is the most important factor in a FICO Score. Payment history keeps track of whether you have been able to meet all your payments on time when payments are due. This can take into consideration your payments on credit cards, mortgage, car loan, student loans, medical bills, and other personal debt. Paying debts on-time means a higher your score.
Amounts Owed (30%). Having credit accounts and owing money isn’t a bad thing. However, if you are using a lot of your available credit, this may indicate that you are overextended, and banks can interpret this to mean that you are at a higher risk of defaulting.
Length of Credit History (15%). On-time payments of credit card bills and other monthly debts (such as a mortgage or car loan) for several years, makes you a reliable borrower and will raise your credit score

Credit Mix (10%). FICO scores consider your mix of credit cards, retail accounts, installment loans, finance company accounts and mortgage loans. Don't worry, it's not necessary to have one of each.
New credit (10%). Research shows that opening several credit accounts in a short amount of time represents a greater risk—especially for people who don't have a long credit history.
For most people, these factors frequently change debt is paid-off and new debt is created. This means your credit score will update frequently too.

Do bank accounts show up on your credit report?

According to the credit bureau Experian, banks and credit unions don't report an individual’s bank account information to the credit reporting agencies (Experian, TransUnion and Equifax), so it's not listed on your credit report. As such closing a bank account won’t affect your credit score.

What happens when you close a bank account?

When you close your bank account you simply end your relationship with the financial institution.

When can closing a bank account affect your credit score?

There are times when closing a bank account can affect your credit score.

If you have overdrawn your account or owe any other service fees, it is bad to close a bank account without paying off these debts. Failure to pay off any money owned to the bank will be reported to the credit bureaus and your credit score will be damaged. Walking away from debts owed can also prevent you from receiving new credit or being approved for loans and credit cards, and possibly a new account.

Before closing your bank account

It’s easy to close a bank account. If you intend to close your bank account, here are some tips to follow to help the process go smoothly.
  1. Check recurring deposits and withdrawals. Create a list of your recurring automatic deposits and withdrawals. These will need to be transferred to a new account before you close your existing account.
  2. Check for pending transactions. If you’ve recently deposited checks or made other transactions in checking or savings, these need time to clear. If you intend to close an account, it’s a good idea to not execute any transaction for a week to 10 days prior to closing the account. This will allow time for all your transactions to settle.
  3. Don't open and close multiple accounts at once. Keep it simple. It’s best to be methodical about which accounts you have open and closed. In most cases, this can be done over the course of a week or two, to allow funds to transfer and be available.
  4. Find a replacement account. Unless you need all the money that you’ll be withdrawing, you should research other credit union and bank account options to find the benefits, services and rates that meet your needs.
  5. Transfer funds to new account. Once you’ve opened a new account you can transfer or deposit your old account funds.
  6. Confirm account closure. Confirmation can be done online. Representatives at the bank you are leaving can also help you check that your account(s) successfully closed.

How to check and monitor your credit score

There are several ways to get your credit score. To check your credit score for free try

Learn more about how to check your credit score.
With Credit Score and More from CU SoCal, you can check your real time credit score and view your credit history instantly, through Online and Mobile Banking. There is no cost or credit card needed. This service is 100% free to all CU SoCal Members. 

Is closing a bank account a good idea?

Closing a bank account might make sense if you've found an account at a different credit union or bank that provides higher interest and/or more of the account features you need. Other reasons people close a bank account include consolidating bank accounts, moving to a different city or state, switching to an online bank, marriage, divorce, etc. more.
Each financial institution offers unique services, rates, and other benefits. For this reason, some people choose to keep open several bank accounts, either at the same credit union or bank or at different ones. This strategy lets you take advantage of a variety of products and services.
Closing a bank account for any reason is a personal choice based on your unique financial needs.

How to keep your bank account open

All credit unions and banks have minimum balance requirements for various types of accounts. To keep an account open, all that’s needed is to meet the minim account requirements. This may include making a specific number of transactions each month to keep the account open and active.

Why savvy consumers choose CU SoCal

For over 60 years CU SoCal has been providing financial services, including mortgages, Home Equity Loans, HELOCs, car loans, personal loans, credit cards, and other banking products, to those who live, work, worship, or attend school in Orange County, Los Angeles County, Riverside County, and San Bernardino County.
Please give us a call today at 866.287.6225 today to schedule a no-obligation loan consultation with a CU SoCal Member Services specialist.

Apply for Membership at CU SoCal Today!

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Credit Union of Southern California (CU SoCal) is a leading financial institution empowering those who live, work, worship, or attend school in Orange County, Los Angeles County, Riverside County, and San Bernardino County to reach their goals and build strong financial futures. CU SoCal provides access to convenient money management services and offers competitive rates and flexible terms on auto loans, mortgages, and VISA credit cards—turning wishing and waiting into achieving and doing.


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