Does Closing a Bank Account Hurt Your Credit | Chase (2024)

FAQs

Does Closing a Bank Account Hurt Your Credit | Chase? ›

The act of closing a bank account, such as a checking or savings account, does not directly affect your credit score. Your credit score is not directly affected by your checking and savings account activity. That includes account closures.

When closing a bank account, a common question people ask is whether it will negatively impact their credit scores. Fortunately, closing a savings or checking account that's in good standing won't hurt your credit in any way.

The bottom line. Having a closed account on your credit report isn't necessarily a bad thing. If the account shows on-time payments and was in good standing when it was closed, it could help your credit score.

The mere act of closing a bank account won't hurt your credit. But it might if your account isn't in good standing. If your account balance is negative, this information will show up on your ChexSystems report. ChexSystems gathers data about consumers' banking activity and sells it to financial institutions.

While it might seem like holding fewer credit cards could help your credit, losing the available credit limit on the closed account can increase your utilization rate, which can hurt credit scores. If you're considering closing a bank account, however, be assured that it will have no direct effect on your credit.

While there's truth to the idea that closing a credit account can lower your score, the magnitude of the effect depends on various factors, such as how many other credit accounts you have and how old those accounts are. Sometimes the impact is minimal and your score drops just a few points.

Information about your bank account generally isn't included on your credit report because it's not thought of as credit. So closing your bank account shouldn't affect your credit score. But if you close your bank account when you're overdrawn, you could find that this does have an impact.

The mere act of closing a bank account doesn't have a direct impact on your credit. The Consumer Financial Protection Bureau confirms that the three major credit bureaus — Experian, Equifax and TransUnion — don't typically include checking account history in their credit reports.

Any negative mark on your credit can impact your score and reduce your chances of qualifying for a mortgage. This is especially true if you have debts that are late (past due), charged off, or currently in collections. But the reporting of these derogatory accounts doesn't disqualify you from getting a mortgage.

Closing an account may save you money in annual fees, or reduce the risk of fraud on those accounts, but closing the wrong accounts could actually harm your credit score. Check your credit reports online to see your account status before you close accounts to help your credit score.

What is a valid reason for closing a bank account? ›

Banks reserve the right to cancel your account for certain activities. Some of the most common reasons for cancellation are inactivity, negative balances, or fraud.

The act of closing a bank account, such as a checking or savings account, does not directly affect your credit score. Your credit score is not directly affected by your checking and savings account activity. That includes account closures.

As TransUnion and Experian note, a closed account that shows a positive history of payments is likely to help your credit score. Generally, a closed account with negative history can continue to hurt your credit score for seven years.

If you close a bank account, companies and vendors will no longer be able to automatically deduct monthly payments tied to that account. You will have to make other arrangements to pay what you owe or discontinue any service agreements.

Try to keep all your bank accounts — particularly checking accounts — active by consistently meeting your bank's minimum transaction requirements. If you find that any of your accounts have fallen inactive, don't hesitate to close them and deposit the funds into an account you use more regularly.

They are not linked to each other except that you are the common entity from your side and the bank is the common entity from its side. Your credit card will continue to be valid and active even if you close your savings bank account.