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Opening A Lot of Bank Accounts= does it effect Credit?
 

Hey everyone! I know that this topic has been hit before a few times, but I think it hasn't been touched in a few years (3 I believe), but then again I might have missed a thread...anyway

I was wondering about the opening and closing of bank accounts. I know how to stealth well, and have been doing it for a while now. I know that you are suppose to space out the opening and closing of accounts. But does having many bank accounts ( 10+ accounts ) hurt your credit score what so ever, and does closing these accounts out hurt your credit?

We know that closing and opening many accounts at one time can raise some flags. It's all about building relationships with these banks, but what if you were to open and close 10 banks within the year. Would that hurt your credit? Just wondering if anyone knew 100% :)

ps: I understand that it would be crazy to open this many accounts, and close them, I am just figuratively speaking stealthiers :)

re: Opening A Lot of Bank Accounts= does it effect Credit?
 

It depends. There are two potential issues. The first is with the mainstream credit bureaus (Transunion, Equifax and Experian) and the second is with ChexSystems.

Some banks, before opening an account - at least the first account - will check your credit history. A couple of inquiries should not have much of an effect on your credit score. Every inquiry WILL affect your score, but not by much. However, having 10 inquiries in a year will definitely lower your score. When you have a lot of inquiries that are not explained by opening a mortgage or a car loan, it looks like you are desperate for credit. That is a red flag for lenders. It is NOT "bad" credit, since there is no default or late payments, but lenders don't like to see a lot of recent inquiries. One or two is fine. Ten is a red flag.

ChexSystems is generally not used by lenders and is not taken into account with credit scores, such as FICO. When banks look at your ChexSystems report, the main thing they are looking for is to see if you left another bank "holding the bag" so to speak for bounced checks or otherwise owing money. Still, having a lot of accounts recently opened or closed can be a red flag to other banks since most people don't generally open or close too many bank accounts in a short period of time.

It all depends on the bank and what they use (if anything) when deciding to open an account. If you leave a bank owing money, then it could go to collections and THAT will usually be reported to the credit bureaus and cause "bad credit".

For the record, I've had over 18 years of experience in the credit and collection industry.

re: Opening A Lot of Bank Accounts= does it effect Credit?
 

When you open a bank account, you get a SOFT credit check done - doesnt really affect your score because you arent asking for credit/loan.

That being done, you do want to space out account openings since banks can see soft checks and be weary of why opening so many accounts in a short time with different banks.

10 bank accounts in a year...1 per month could be fine actually - rotate between banks. You have many banks to choose from, if you can access them

re: Opening A Lot of Bank Accounts= does it effect Credit?
 

I have to add that this is not always true. It SHOULD be, but there ARE some banks that do a "hard pull" when you apply for a checking account. ING Direct is one of these. Chase will also do this under certain circumstances, such as when you apply for overdraft protection. There are others as well. If you want to know if a particular bank does a "hard" or a "soft" pull, try using Google to find the information or the search function on the FICO Forums.

The difference between a "hard" and a "soft" pull is this: A HARD PULL is visible on your credit report for 2 years. Not only can YOU see it if you request your credit report, but OTHERS who pull your report will see it as well. A SOFT PULL is only visible to YOU and the CREDIT BUREAU.

Most SOFT PULLS are done by your current creditors to watch for signs that you are getting into trouble financially. While the practice of universal default - raising your interest rates because you are behind on another bill - has been banned, credit grantors CAN still cancel your account or reduce your credit line if they see signs of financial weakness on your credit report.

Other reasons for SOFT PULLS include employer checks, bank offers to extend credit to you that you did not apply for, some apartment rentals, etc.

The SAFE thing is to assume that EVERY PULL is a HARD PULL. The fact is, ANY creditor that has "permissible purpose" CAN do either a hard or soft pull. There have been several attempts to codify this into law to regulate hard vs soft pulls, but none of those attempts have gone anywhere yet to my knowledge.

If you want to learn more about hard vs soft pulls in an easy to understand manner, try:

Hard Credit Pull vs Soft Credit Pull [Infographic] | Lendio

re: Opening A Lot of Bank Accounts= does it effect Credit?
 

Thank you everyone! I think this information can help a lot of people! :)

re: Opening A Lot of Bank Accounts= does it effect Credit?
 

This is NOT the case for every bank in the USA.

Could you confirm your source for this statement please

:mod:

I replied via tapatalk and saw jeffweico's response later.

Please respond though

re: Opening A Lot of Bank Accounts= does it effect Credit?
 

I agree wholeheartedly that a HARD pull is done when you apply for overdraft protection.

I am speaking more from experience with Canadian banks (as you can imagine) - all my accounts with no overdraft AND no credit card application were soft pulls.

I can see your point about banks in the USA since there are much more choices of banks there.

I would add that when a person goes to open an account, he should ask "Hey is a soft pull or hard pull of credit score being done? I am in the process of seeking mortgage (etc.) so I dont want my score being affected" - I used to do that to find out at every bank when I go open the accounts.

It also shows to the account manager/agent that you are savvy to the banking affair.

re: Opening A Lot of Bank Accounts= does it effect Credit?
 

Soft pulls do not impact your credit score.

re: Opening A Lot of Bank Accounts= does it effect Credit?
 

Gearing the info towards USA based sellers. Other countries have similar conditions

Each and every application for a bank account is treated differently.

Banks operate within guidelines.

Customers are treated differently, however.

Majority of users are not credit-impaired. Some are.

For anyone considering running multiple accounts, they are advised to obtain their FREE credit report every 12 months.

Maintain control of your OWN scores. Make sure that nothing sinister has ever gone onto your report simply because you spoke to a bank regarding obtaining an account.

Read thro' the below site.

Be aware of your rights under USA Federal Law.

Free Credit Reports | Consumer Information

:mod:

Re: Opening A Lot of Bank Accounts= does it effect Credit?
 

I get my credit score few times a month. Worth the cost. I yet have it effect credit opening bank account but I always deny overdraft service if given that option.

Re: Opening A Lot of Bank Accounts= does it effect Credit?
 

If you want to know how your credit score is calculated, FICO has a good article explaining it:

FICO Credit Score Chart: How credit scores are calculated

Keep in mind this is GENERAL INFORMATION. Each credit bureau has its own scores, and also uses different models for different markets. A credit score is used primarily to predict the likelihood of default on a specific type of account. So, your FICO mortgage score may be a little bit different from your FICO utility or FICO credit card scores.

FICO is the most widely used credit score, especially by mortgage lenders.

Generally speaking, inquiries don't have much of an effect on your score, unless there are a LOT of them.

Re: Opening A Lot of Bank Accounts= does it effect Credit?
 

Most hard inquiries hit you for 5-10 FICO points so like Jeff states add a ton of them and you will get a hit on your score and lenders will see you as wanting to pile up debt.

Re: Opening A Lot of Bank Accounts= does it effect Credit?
 

Agreed - if applying for credit, a lot of hard pulls will bring you down quickly.