Will switching my current account affect my credit rating? | Tide Business (2024)

FAQs

Will switching my current account affect my credit rating? | Tide Business? ›

Simply switching from one bank to another using the Current Account Switch Service will not affect your credit rating.

No, providing you repay any outstanding overdraft(s) on your previous account(s) as required by your old bank or building society.

Your new bank will have transferred all of your regular incoming payments (such as your salary or benefits) and outgoing payments (such as Direct Debits, standing orders, future dated payments and bill payments) to your new account, along with any remaining credit balance.

Will having two or more current accounts damage my credit score? Not necessarily, no. However, having two or more current accounts won't necessarily damage your credit score, but it could have a negative impact if you start dipping into multiple overdrafts – making it look as if your finances are becoming stretched.

If your account has a zero balance when it's closed, it won't have an effect on your score. However, if you close the account when it has a negative balance, the bank may either send your account to a collection agency or come to a default arrangement with you.

For example, opening multiple accounts may impact your credit score. This is especially the case if you start using multiple overdrafts from your different accounts. This can signal financial strain and may cause a hit to your credit score. Some current accounts come with monthly costs.

A quarter* (25%) of Brits say they don't have the time or it's too complicated to switch their bank account without realising it takes less than half an hour on average, according to recent research from One Poll. 21% of respondents said they were worried about their direct debits or payments being disrupted.

You have two choices when switching bank accounts. You can decide to move everything to your new account and close your old one, which is known as a full switch. Alternatively, you can move some payments across and keep the existing account open, which is instead known as a partial switch.

The good news is that simply opening a savings or current account won't impact your credit score directly. What can have an impact, however, is how you manage these accounts and any associated overdrafts.

What affects your credit score the most? ›

Most important: Payment history

Your payment history is one of the most important credit scoring factors and can have the biggest impact on your scores. Having a long history of on-time payments is best for your credit scores, while missing a payment could hurt them.

Using more of your credit card balance than usual — even if you pay on time — can reduce your score until a new, lower balance is reported the following month. Closed accounts and lower credit limits can also result in lower scores even if your payment behavior has not changed.

Ways to improve your credit score

Paying your loans on time. Not getting too close to your credit limit. Having a long credit history. Making sure your credit report doesn't have errors.

Although it's important to limit the number of hard credit checks you have, the credit score impact for most people switching bank accounts will be negligible and short lived. However, there are some situations where you might want to reconsider whether now is the best time to switch accounts.

Closing an account may save you money in annual fees, or reduce the risk of fraud on those accounts, but closing the wrong accounts could actually harm your credit score. Check your credit reports online to see your account status before you close accounts to help your credit score.

Remember, the presence of this type of account on your credit report is a positive. As TransUnion and Experian note, a closed account that shows a positive history of payments is likely to help your credit score. Generally, a closed account with negative history can continue to hurt your credit score for seven years.

Your credit report does not show the banking history of your checking and savings accounts, so switching banks will not affect your score. The information that will be included in your credit report is: Personal information relating to your banking accounts, including your social security number.

How do balance transfers affect your credit score? Even though balance transfers can help you tackle debt – thereby improving your credit score – they can hurt your credit score, too. If you apply for several different cards with low or 0% introductory interest rates, this can affect your credit score.

Can I get a bank account with poor credit? Yes, you can still apply for a basic bank account, even if you've had financial difficulties in the past.

A joint account might damage your credit score

Opening a joint account adds a financial link to the other person. This means companies will look at both of your credit histories as part of any credit checks. If they have a poor credit history, this might lower your chances of acceptance.