- How Does Unsecured Debt vs. Secured Debt Affect Credit Ratings?
- Does Requesting a Loan Affect Your Credit?
- Can Bad Credit Be Deleted or Corrected?
- Which Factor Has the Largest Impact Percentage Wise on Your Credit Score?
- How Does Loan Reassignment Affect Your Credit?
- What Is an Unrecorded Inquiry on My Credit Report?
Your credit report is a record of your financial activity. Although you might use your bank account on a daily basis, the information is not revealed in your credit report. The number of accounts you have and the amount of money in those accounts does not affect your credit score. If you have more than one or two bank accounts, keep the accounts in good standing to avoid possible credit complications.
Reporting to Bureaus
Banks do not report any of your banking account information to the credit bureaus. A credit score is calculated based on a borrower's revolving and installment accounts, such as credit cards and loans. When lenders pull your credit report, all they see is your payment history along with certain public records information, such as judgments, liens and bankruptcy. Unpaid debt, including medical or utility bills, can also appear on a credit report. To achieve a high credit score, you must pay all your bills on time, keep a low balance-to-credit limit ratio and maintain a mixture of different types of credit.
How Bureaus Get Your Personal Information
Each credit bureau obtains information about you from different sources, therefore the information in one credit report may differ from the next. When you apply for a credit card, you are typically required to provide your address, employment information and annual income. When the application is processed, the credit bureaus may update the personal information section of your credit report based on the information you provide. Because the employment portion of your report is not updated on a regular basis, it is often out of date. You can contact the credit bureau directly to update the information.
The Impact of Your Income
While the number of bank accounts you have open is not a factor in calculating your credit score, your income is often used to determine your creditworthiness. If you are applying for a home, auto or personal loan, lenders will assess your debt-to-income ratio. The ratio is the percentage of your money applied to bills each month. The lower the number, the better. Lenders might hesitate to extend credit to someone who has already committed a large percentage of his income to other creditors.
When Bank Accounts Affect Credit
If you overdraw your account because of insufficient funds, banks require you to pay the amount you owe along plus fees. When you are unwilling to repay the amount owed, the bank may sell the debt to a collection agency. Even though banks do not report bad accounts to credit bureaus, most collection agencies report the delinquent accounts purchased. In addition to the derogatory entry on your credit, the bank will likely report the account to the consumer-reporting agency known as Chex Systems. Banks rely on Chex Systems to find out whether an applicant owes another banks money.