Your bank account information doesn't show up on your credit report, nor does it impact your credit score. Yet lenders use information about your checking, savings and assets to determine whether you have the capacity to take on more debt.
When applying for loans and/or credit cards, lenders first look at your credit score and credit report to see your open and closed credit accounts and loans, as well as details about your payment history. From this, they can also tell how much available credit you have, how much you're using, if you've had anydebtgo to collections and the number of soft or hard inquirieson your account within the past two years.
But the credit report leaves out some important data: According to Experian, "information about assets such as checking account balances, savings account balances, certificates of deposit, individual retirement accounts, stocks, bonds or other investments" are not listed in your credit profile.
This is where your bank statements come into play.
Below, Selectexplains why getting your bank account information in order can help you the next time you apply for credit.
Why lenders might ask for more information
Banks and lenders look at everything from your car loan to your mortgagewhen you apply for new creditbecause they need to assess your capacity to pay your bills.
While this is standard with mortgage lending, auto lending and sometimes even personal loans, it might also come up when you apply for a new credit card. Because of the high unemployment rate and general economic uncertainty, card issuers are tightening requirements on credit card approvals and looking at your income documentation as well as your credit score to see if you qualify.
What information lenders will ask for
When applying for a loan, a mortgage or a credit card, lenders will ask foryour salary and incomebecause these metrics measure how much money you have, or your capacity to make monthly payments. They may want to see proof such as recent pay stubs, tax returns, W-2 forms, direct deposit and/or bank statements.
For a sizable loan like a home mortgage or business loan, lenders will take a closer look at a borrower's assets. These assets can include your cash, such as your checking accounts, savings accounts and CDs. They can also include investment assets, like your retirement accounts, stocks and bonds. Properties and material assets might also be taken into consideration, and you'll need to show documentation of the appraised valueif you're planning to use them as collateral.
How lenders assess what a good candidate is
A lender or card issuer will assess how reliable you are as a potential borrower by looking atthe overall picture: your credit history, your credit score, your income and your various cash and investment assets. A low debt-to-income ratio and a history of steady paychecks will help your case in getting approved for new credit because they demonstrate both your capacity to take on debt and the likelihood that you will repay it. Lenders look for expenses like monthly housing payments and the total of your minimum payments across all accounts to get an idea of how much you owe every month, versus what you bring in.
If you are looking to apply for a credit card but unsure how your income stacks up, consider a secured credit card. Those with less-than-stellar credit and inconsistent income could have a better chance of qualifying for these cards because they have more flexible income requirements. With a secured card, you put down a refundable deposit upfront, which acts as your credit limit, and youbuild your credit scoreby paying your balances off on time and in full.
Some of Select's top picks for secured credit cards are below.
Bottom line
When it comes to applying for new credit, your credit history and credit score are definitely important but they make up just one factor of your application.
To show lenders that you have the ability to repay your debt, be prepared when you apply for a new loan or credit card. Have these financial resources ready to go and know your credit score going in. Doing so canopen access to credit and put you on a path to a healthy financial future.
Don't miss:7 common fees of checking accounts and how to avoid them
Information about thePlatinum Secured Mastercard®,DCU Visa® Platinum Secured Credit Card, and SDFCU Savings Secured Visa Platinum Cardhas been collected independently by Select and has not been reviewed or provided by the issuer of the card prior to publication.
Editorial Note: Opinions, analyses, reviews or recommendations expressed in this article are those of the Select editorial staff’s alone, and have not been reviewed, approved or otherwise endorsed by any third party.
FAQs
Your bank account information doesn't show up on your credit report, nor does it impact your credit score. Yet lenders use information about your checking, savings and assets to determine whether you have the capacity to take on more debt.
Does having a lot of bank accounts affect your credit score? ›
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.
Does joining bank accounts affect credit score? ›
Checking accounts, including joint accounts, are not part of your credit history, so they do not impact credit scores. Your credit report only includes information about your debts, and accounts have the same effect on your credit whether you are associated with the account as an individual or as a joint owner.
Why do banks use your credit score when determining eligibility for credit? ›
Lenders often use credit scores to help them determine your credit risk. Credit scores are calculated based on the information in your credit report. In most cases, higher credit scores represent lower risk to lenders when extending new or additional credit to a consumer.
Do banks run credit checks for checking accounts? ›
Banks don't look at your credit score when you open a checking and/or savings account, but they may screen your banking history.
Is having multiple checking accounts bad? ›
Really, there's no hard and fast rule about how many checking accounts any one person should have. The number and type of accounts that works for you will depend on many factors, including your financial goals, spending habits, and comfort level with monitoring and managing multiple accounts.
Is it worth having multiple bank accounts? ›
Having multiple bank accounts can help separate finances when needed. Couples might want a joint bank account for funds managed together and separate accounts for personal funds. If you're a small business owner, having a different account for your business finances makes it easier for bookkeeping and tax purposes.
Which bank account does not show on a credit report? ›
Your savings account balance does not appear on a credit report. Anyone checking your report cannot tell how much money you've deposited, withdrawn, or currently have in your account. Therefore, putting money in or taking funds out of a savings account does not influence your credit score.
Does poor credit affect bank accounts? ›
If you have a poor credit score, your bank could see you as higher risk, which can affect your eligibility for opening a new account. However, this score is just one of many other factors considered when you apply for a bank account.
Does switching banks affect credit score? ›
Simply switching from one bank to another using the Current Account Switch Service will not affect your credit rating.
Highlights: While older models of credit scores used to go as high as 900, you can no longer achieve a 900 credit score. The highest score you can receive today is 850. Anything above 800 is considered an excellent credit score.
What is an excellent credit score? ›
Excellent (800 to 850): Lenders generally view these borrowers as less risky. As a result, individuals in this range may have an easier time being approved for new credit. Very good (740 to 799): Very good credit scores reflect frequent positive credit behaviors. Lenders are likely to approve borrowers in this range.
How to increase credit score to 800? ›
Making on-time payments to creditors, keeping your credit utilization low, having a long credit history, maintaining a good mix of credit types, and occasionally applying for new credit lines are the factors that can get you into the 800 credit score club.
Which bank account is best for bad credit? ›
Summary: Best Bank Accounts for Bad Credit in 2024
| Account | Annual Percentage Yield | Learn more CTA below text |
|---|
| SoFi Checking and Savings Account | Up to 4.60% | On SoFi's Website |
| Navy Federal Credit Union Free EveryDay Checking | 0.01% | |
| Capital One 360 Checking Account | 0.10% | |
| Chase Secure Banking℠ | N/A | Via Chase.com |
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When a lender or company requests to review your credit report as part of the loan application process, that request is recorded on your credit report as a hard inquiry, and it usually will impact your credit score.
What is the easiest bank to get approved for? ›
What are the easiest bank accounts to open online?
| Bank | Best for | Time to apply |
|---|
| Chime 4 | Bad credit | Under 5 minutes |
| Chase | Higher balances | About 10-15 minutes |
| Current | Debit card rewards | About 5 minutes |
| Ally | Earning interest | About 5 minutes |
12 more rowsHow many credit cards is too many or too few? Credit scoring formulas don't punish you for having too many credit accounts, but you can have too few. Credit bureaus suggest that five or more accounts — which can be a mix of cards and loans — is a reasonable number to build toward over time.
How many bank accounts are too many? ›
While having multiple accounts can have its perks, it can also lead to confusion and complicate your financial life. If you find it hard to keep track of all the accounts and their balances, it's best to stick to one or two accounts.
How many accounts affect your credit score? ›
Two factors that contribute to your credit score are the number and type of credit accounts. If your goal is to get or maintain a good credit score, two to three credit card accounts, in addition to other types of credit, are generally recommended.
Is it bad to have lots of savings accounts? ›
Having multiple savings accounts can help you keep track of various savings goals. Consider how many accounts you're comfortable managing when deciding if you should open more savings accounts. You can have multiple savings accounts with one bank or spread them across several institutions.
