Does your credit score go up if you close an account?

Answered by Jeremy Urbaniak

Closing an account, whether it’s a checking or savings account, does not directly impact your credit score. Your credit score is determined by various factors such as your payment history, credit utilization, length of credit history, types of credit, and recent credit inquiries. Bank account information, including balances and activity, is not reported to credit bureaus and therefore does not factor into your credit score calculation.

However, it’s important to note that while closing a bank account doesn’t affect your credit score, it may indirectly impact your creditworthiness in certain situations. For example, if you have a loan or credit card linked to the account you’re closing, closing the account might affect your ability to make payments or manage your credit effectively. Late payments or defaulting on loans can have a negative impact on your credit score.

Closing a bank account could also impact your credit indirectly if it leads to financial instability or difficulty managing your finances. If you rely on that account for bill payments or have recurring payments set up, closing the account without making alternative arrangements could result in missed payments or overdrafts, which may be reported to credit bureaus and negatively affect your credit score.

In some cases, closing a bank account may be necessary or beneficial, such as if you no longer need the account, want to consolidate your accounts, or are dissatisfied with the bank’s services. However, it’s important to consider the potential consequences and take appropriate steps to mitigate any negative impacts on your financial stability and creditworthiness.

To minimize any potential negative effects, consider the following steps when closing a bank account:

1. Review your account activity: Before closing the account, ensure that all pending transactions, bill payments, and direct deposits have been processed or redirected to another account.

2. Update payment information: If you have automatic payments or direct deposits linked to the account, update the payment instructions with the new account information to avoid any disruption in payments.

3. Set up alternative accounts: If you’re closing a primary account, make sure you have another account in place to handle your day-to-day banking needs, bill payments, and other financial obligations.

4. Monitor your credit: Regularly review your credit report to ensure that there are no unexpected changes or errors. This allows you to address any issues promptly and protect your credit score.

Closing a checking or savings account does not directly impact your credit score because bank account information is not reported to credit bureaus. However, it’s essential to consider the potential indirect effects on your creditworthiness and take appropriate steps to manage your finances effectively when closing an account.