Does Closing a Bank Account Hurt Your Credit?

Does Bank Account Information Show Up on a Credit Report?

Banks and credit unions don't report your bank account information, including closures, to the credit reporting agencies (Experian, TransUnion and Equifax). As a result, any bank account you open or close won't be listed on your credit report.

Your credit reports are a record of how you manage your debt payments. Since your checking, savings and other deposit accounts are not reflected in your credit reports, there's no direct link between them and your credit scores.

How Closing a Bank Account Can Affect Credit

While the act of closing a bank account won't impact your credit on its own, it's possible for it to indirectly impact your credit in these situations:

You Have a Negative Balance

If you close the account with a negative balance and don't pay off the debt you owe in a timely manner, the bank or credit union could send it to a collection agency. The agency may choose to report the collection account to the credit bureaus, which can have a significant negative impact on your credit score.

What's more, the collection account will remain on your credit report for seven years from the date of the original delinquency, even if you pay it off. Newer credit score models may ignore paid-off collection accounts when calculating your credit scores, however.

You Pay Bills With the Account

If you had automatic payments for loans or credit cards coming out of the closed bank account, it's crucial that you switch everything over to your new bank account. Automatic payments can't be pulled from a closed account and any attempts will result in the payment being declined.

If you don't update your payment information in time and accidentally miss a payment by 30 days or more, it could have a severe negative impact on your credit score.

How to Safely Close Your Bank Account

Before you close a bank account, it's important to take steps to protect your credit and financial health:

1. Open a new account first. If you're closing your only bank account, open a new one beforehand. This ensures you have a place to deposit funds and continue managing your money without disruption.
2. Update bill payments and direct deposits. Switch all automatic payments, subscriptions and direct deposits to your new account. Give it a few weeks to make sure everything transfers smoothly before closing your old account.
3. Settle any balances. Make sure your account has a zero balance. Pay off any fees, overdrafts or pending charges to avoid surprises.
4. Transfer your remaining funds. Move your remaining funds to your new account or withdraw them in cash. Some banks may charge fees if your account stays open with a zero balance for too long.
5. Request written confirmation. Ask your bank for written confirmation that your account has been closed. This protects you from unexpected charges or reactivations later on.
6. Monitor the accounts for a few months. Keep an eye on your old account for lingering charges or errors and follow up on any automatic payments or deposits that didn't switch over correctly.

Consider a Checking Account That Can Help You Build Credit

If you're thinking about opening a new checking account, the Experian Smart Money^™ Digital Checking Account & Debit Card can help you build credit without debt by automatically linking to Experian Boost^®ø, which gives you credit for eligible bill payments. You will also pay no monthly fees^¶ for Experian Smart Money, have access to more than 55,000 fee-free ATMs worldwide^** and could receive your paychecks up to two days early when you enroll in direct deposit^†. You can get an Experian Smart Money Account through a free or paid Experian membership, which also gives you access to your FICO^® Score^Θ, Experian credit report and more. See terms at experian.com/legal.