Opening a savings account is one of the smartest financial moves you can make. It has multiple pros—you grow your money, save for retirement, and plan for your future in one fell swoop.
Still, an impressive financial portfolio isn’t everything—you also need a good credit profile, especially for significant financial needs like a college or home loan. But does opening a savings account affect your credit score? Find out the answer in this article.
Does Opening a Savings Account Affect Credit?
Savings accounts don’t impact your credit score because they don’t report your activity to credit bureaus. This is why your bank pulls your ChexSystems report to verify your identity when you apply for a new savings account.
A ChexSystems report helps banks look for bounced checks, frequent overdraft fees, and unpaid negative balances in your account history. If your bank doesn’t find any of this in your history, it will accept your application.
If the bank finds unfavorable activity in your history, you may get a negative mark on your ChexSystems report. This can cause banks to deny your savings account application, but it doesn’t have any effect on your credit score.
Still, depending on your financial institution, your application for opening a savings account could trigger a hard credit check, which can negatively impact your credit score.
Do Banks Run Credit Checks for a Savings Account?
When you apply for a checking or savings account, your bank or credit union may run a credit check on your account history. They can do this in two ways:
- Soft credit check—A soft credit check provides a quick, unofficial view of your credit history. It’s similar to when a creditor “pre-approves” you for credit, and it doesn’t affect your credit score
- Hard credit check—A hard credit inquiry occurs when banks formally check your credit to make a decision. It can lower your score by a few points and stay on your credit report for about two years
Hard inquiries are mostly pulled by credit unions. If you’re setting up a savings account with one, always ask whether you should expect a hard credit check.
The good news is that it’s unlikely for a single hard credit check to significantly affect your credit score. It will most likely drop only by a few points or, sometimes, not at all.
Do You Need a Good Credit Score To Open a Savings Account?
No, you don’t need to have a good credit score to open a savings account with a bank or credit union. This is because your bank doesn’t need to verify your track record of returning what you borrow, unlike for other financial products like loans or credit cards.
Instead, savings accounts merely provide a secure place for you to deposit and grow your money. So, whether you have a high credit score, a low credit score, or no credit score at all, you can still open a savings account to start saving for your financial goals.
It’s still worth establishing a credit score because it can make all the difference when you’re applying for loans. A good credit score will help you qualify for better terms and lower account interest rates, which can save you money in the long run.
What Is a Good Credit Score?
The higher your credit score, the more likely lenders will approve your loan application. A “good” credit score for you will depend on your age and other circumstances, but you can assess how your credit score fares overall based on the FICOⓇ credit score categorization:
- Excellent: 800–850
- Very good: 740–799
- Good: 670–739
- Fair: 580–669
- Poor: 300–579
No matter which bureau you’re registered with, having a credit score above 670 will give you increased access to better credit opportunities and investment options.
What Affects Your Credit Score?
Opening a savings account doesn’t affect your credit score, but here are five factors that do:
- Payment history
- Credit utilization
- Length of credit history
- Credit mix
- New credit inquiries
Payment History
Your payment history is the most important factor affecting your credit score because it shows whether you’ve consistently repaid borrowed funds for each account listed on your credit report.
Late payments have a negative impact on your score, with the severity depending on how late you were—30 days, 60 days, or 90+ days.
Aside from that, debt settlements, charge-offs, bankruptcies, collections, and foreclosures can all significantly hurt your credit score. The more recent and frequent these are, the more they’ll lower your score.
Credit Utilization
Credit utilization is the amount of credit you’ve used relative to your total available credit. It considers:
- The percentage of your total available credit that you’ve used. Lower usage indicates that you manage your debts well
- The amounts owed on different types of accounts. A balanced mix of mortgages, auto loans, credit cards, and installment accounts indicates that you’re a responsible borrower
- The total amount owed compared to the original amount on installment accounts. The lower this amount is, the better. For example, a $50 debt on a $500 limit card looks more responsible than a $5,000 debt on an $8,000 limit card
Length of Credit History
The length of your credit history refers to how long you’ve been taking lines of credit from banks or credit unions for. It considers the age of your oldest and newest credit accounts and the average age of all your accounts.
A longer credit history gives a clearer picture of your long-term financial habits and makes it easier for lenders to assess your creditworthiness. Older accounts that have been managed well can positively influence your score.
Credit Mix
Your credit mix refers to the different types of credit you use, such as revolving (credit cards) and installment credit (mortgage, car loans, or personal loans used for expenses like health-related costs).
Having a mix of credit types shows lenders that you can manage multiple forms of credit responsibly. This can boost your creditworthiness and improve your credit score.
New Credit Inquiries
The number of applications you’ve made to get new credit lines can have a small effect on your credit score. Submitting too many within a short period can signal to lenders and creditors that you may be taking on a lot of new debt and make you look like a high-risk borrower.
To avoid new credit inquiries affecting your credit score, refrain from sending requests for multiple accounts at the same time and apply for credit only when necessary.
Does Having a Savings Account Improve Your Credit Score?
Just like opening or closing a savings account doesn’t hurt your credit score, it doesn’t improve it either. The reason is the same—savings account activities aren’t reported to the credit bureaus.
Still, if scammers get unauthorized access to your newly opened account and suspicious activity is reflected in your credit reports, it can seriously damage your credit score. This is why it’s a good idea to open a high-security savings account, which is where FortKnox by Austin Capital Bank comes in. It’s the only FDIC-insured savings account on the market with a strong focus on account and fund security.
