If you’re wondering whether having multiple bank accounts affects your credit score, you’ve come to the right place.
Similarly, if you’re wondering whether it’s a good idea to open a new bank account with another bank, we can help you with that decision too.
We’ll also tackle a few related questions along the way.
You need to have a credit score of at least 700 to be considered to have a good credit score. And a score above 750 is deemed excellent.
Credit scores of 650 to 700 are deemed fair, but any credit score below 649 is considered a bad credit score.
The simple truth is that your credit score is not really affected by the number of bank accounts that you have, that’s the general rule.
But it is, of course, affected by how you use them.
However, opening loads of new bank accounts in a very short space of time can raise suspicions. However, the damage that this can cause to your credit score is usually just short-term, and you may be able to recover.
So, now that you know that having multiple bank accounts isn’t necessarily going to lower to increase your credit score, let’s look into whether it’s good to have multiple bank accounts.
Having accounts with multiple banks means that you will have more financial opportunities offered to you. You can be offered more loans and more credit cards.
And this needn’t be something to shy away from if you are already in debt, because a good, affordable loan could be used to consolidate existing debts.
Having multiple bank accounts is also a great way to keep your money organized. You can keep specific accounts for specific expenses.
For example, you could have a regular checking account to receive your wages to pay for your monthly bills. And then you could have separate saving accounts to help pay for Christmas, vacations, and home improvements.
There’s no limit on the number of checking or savings accounts that you can open. But since the number of bank accounts you have does not affect your credit score either way, then having too many accounts to keep organized may turn into something of a juggling act.
Our advice would be to have no more than three checking accounts, but to have multiple saving accounts for the various things that you want to save up for.
You would be well advised to keep your accounts in a positive balance, stay in the black rather than the red, having your own money, rather than owing the bank money because you have a negative balance and are overdrawn.
If you have a negative balance on your checking account for a long and sustained period of time, then the bank is within their rights to send your account to a collections’ agency in an attempt to retrieve the amount of money owed. And this will really damage your credit score.
If you know of a bank that’s offering really good interest rates, whether for savings accounts or for personal loans, then you may be tempted to switch banks to take advantage of what’s available.
And there’s no good reason why you cannot do this and still leave your previous, original checking account in place if you so wish, since this will not adversely affect your credit score, unless you have a negative balance in your account.
However, if you wish to abandon your original checking account, then it would make good financial sense to close down the account, because you’ll never know when the bank could trigger a transaction or fee. And this could potentially adversely affect your credit score if you are unaware of it.
But, if you want to close down an abandoned bank account, you must take out all the remaining money in there, because banks will only close the account when there is a zero balance.
Although having multiple checking accounts does not necessarily improve or lower your credit score, the amount of credit accounts you have does. And if your goal is to build great credit, then you’ll want to get and keep different types of credit accounts.
If you can prove that you handle different types of credit, for example mortgage payments, hire-purchase payments, student loans, regular credit cards, and so on, this demonstrates to banks that you can be relied on when it comes to paying any debt, and this will be reflected in your credit score.