Will Closing a Bank Account Hurt My Credit Score?

There may come a point when you decide you'd like to close a bank account. Maybe you're tired of the fees your bank charges. Or maybe you're not satisfied with your bank's customer service. It may even be that your bank account is one of several you have open, and you're looking for a way to consolidate your money so you can better keep track of it.

Generally speaking, closing a bank account will not harm your credit score. But there is an exception to that rule you should know about.

Why closing a bank account usually won't impact your credit score

Your credit score consists of several different factors:

• Your payment history, which is how timely you are with bills
• Your credit utilization, which speaks to how much revolving credit you use at once
• The length of your credit history, with long-standing accounts helping your score
• Your credit mix, which represents the types of credit accounts you have
• Your new credit accounts, which indicates how many new loans or credit cards you've opened recently

As you can see, closing a bank account -- or opening one, for that matter -- won't impact your credit score because it doesn't fall into any of the above categories. When you close a bank account, you're not closing a credit account. You're just taking your own cash out of a specific institution. 

That doesn't speak to how risky a borrower you are. On the other hand, the factors above are designed to give lenders a sense of how much risk they're taking on by loaning you money. If you've applied for too many new credit cards recently, for example, it's a sign that you may be more likely to struggle to keep up with your various payments. 

When a bank account closure affects your credit

While closing a bank account usually won't have an impact on your credit score, the one exception may be if you closed that account with a negative balance. Let's say your account was overdrawn at the time you closed it. In that case, you might owe your bank money. 

If you don't pay what you owe, your bank might send that debt into collections. From there, you're likely to be reported as delinquent on a debt, which could hurt your credit score in a very big way.

Worse yet, Experian says that a delinquent account will generally remain on your credit report for seven years. This holds true whether you pay off that debt or not. So before you close a bank account, make sure you're not looking at a negative balance. And if you are, wait to settle that balance before severing your relationship with your bank.

For the most part, banking activity does not directly affect your credit score. Your bank account balance could get down to $0 and it wouldn't drag down your score (though not having any money could indirectly hurt your credit if you're unable to pay your bills). But be mindful of the one situation where closing a bank account could get you into trouble from a credit score perspective.