How Do Multiple Checking Accounts Affect FICO?

Published: 18th September 2008
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Many of us have more than one checking account with one or more financial institutions. For example, joint checking, business checking, personal checking and more. But can having numerous checking accounts affect your credit score?

The good news is that "no" is the simple answer. Banks do not report checking activity with credit bureaus.

However, the bad news is that your behavior and financial management of multiple checking accounts can get you in trouble with your credit score if you do the wrong things.

Keep those statements clean

Consider for a moment that you are applying for a home loan. Your mortgage broker says to you that the loan underwriter needs to see your bank statements for the past 2 to 6 months. After you gather the statements and get them in order you review them and notice there were a few times when you errantly made purchases with insufficient funds. The statements may show a negative balance and an overdraft fee in those instances. What will the underwriter think of this? It is a negative outcome indeed.

Even though the insufficient funds do not appear on your credit score your loan underwrite may take the overdrafts into consideration when evaluating your creditworthiness. Your documentation of bad financial management could make a difference in the interest rate offered to you, or whether or not you are approved altogether.

Closed for Cause

Your conduct with multiple checking accounts can be a challenge for your financial management if you are not careful. With numerous accounts comes the responsibility to assure that there is sufficient available funds, and you need to assure that you abide by the checking account rules agreed upon when you set up the account.

If you do not fulfill a checking account agreement with a bank they may close your checking account "for cause" and report it to the ChexSystems banking reporting system. These reports remain for 5 years and could prevent you from opening a new checking account, and even cause your other banks to close your current checking accounts.

If your checking account was closed due to poor financial management and with a negative balance, the balance will probably be transferred to a collection agency. If that happens, you can be assured that the checking account fiasco will show up on your credit report and lower your FICO score.

Any one of these cases of poor financial management with checking accounts can affect your creditworthiness. A "tarnished" checking account doesn't have to show up on your credit report in order to deny or limit a loan application. If you currently have multiple checking accounts, or are planning to open additional accounts, be sure to review them each month. Your ability to fix or solve any checking account financial management issues with your bank before they appear on a loan underwriter's desk will help your chances of getting a loan in the future.

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