Going cold turkey with your bank account isn’t a bad idea if you’re trying to curb overspending or if you’re relocating. However, you don’t want to negatively impact your credit scores if you decide to say goodbye to your bank, right? All that effort in maintaining good credit scores on your credit reports can’t go down the drain like that!
How Closing a Bank Account Impacts Your Credit Score
Your bank account isn’t the only mediating factor when it comes to your good credit score. Other factors may cause your credit score to rise or fall. Unfortunately, while these other factors may be linked to your bank, your bank account itself has no direct control over where your credit score ends up if you decide to close it.
With that said, you still need to be wary of the changes in your credit scores when you are closing your bank account. This is because there are several factors that act as interdependent variables, linking your credit to your bank balance. Here are some examples:
- Negative Closing Balance: Have you left your bank account with outstanding dues that are yet to be cleared? If yes, then this can easily negatively impact your credit score.
- Overdraft Bank Account: Your bank drafts may not be a major concern for your credit score or even for the major credit bureaus. But, if a bank account with too many drafts closes, then that may attract some unwanted attention and speculation.
- Repayment Records: Your overdue payments and other parts of bank records are still visible after you’ve said goodbye to your bank account. In this case, the three major credit bureaus, Equifax®, TransUnion® and Experian®, can access your bank records to see how you’ve performed before the closing. This information, being important for your credit report, can impact your credit scores.
How Do I Close Permanently My Bank Account?
Here are a few steps to take to close your bank account adequately.
- View your transactions carefully. If you’re switching your bank account to a different bank, review the transactions and deposits carefully before you start using the other account or permanently close the previous one.
- Apply for second-chance bank accounts. These accounts help users recover some of their lost credit and faulty reports through various processes.
Monitor Your Credit Scores
Even though closing a bank account doesn’t impact your credit score, it is still essential to monitor your credit scores because these records and their implications are usually long-term. This is because your account deals with various factors that credit bureaus consider for evaluating your credit score.