If you’ve had credit problems in the past or are curious about when credit checks can be done, you might want to know if opening a savings account will impact your score. credit.
The good news is that opening a savings account won’t hurt your credit score, just like opening a bank account. On the contrary, opening a savings account and using it responsibly can improve your credit score, especially if you exercise strong financial discipline.
There are a variety of financial decisions you can make that can result in a credit check and can affect your credit score as well. If you are considering opening a savings account, it is worth exploring how this action can influence your creditworthiness.
What Can Affect Your Credit Score?
Your credit history and credit score are based on several factors, the most important of which is access to credit, credit applications, and your repayment history with said credit products – both good and bad.
While we don’t know exactly how the following can impact your credit score, we do know that these various factors can significantly affect your credit score:
- Pay your bills on time
- Constant and growing savings
- Make multiple credit requests
- Maximize a credit card
- Be 14 days late on invoices
- Close a credit card
These days, banks and lenders don’t just report negative events in your financial history, such as a loan default. With a comprehensive credit report, positive events can now be reflected in your credit report.
This is useful to help determine if a negative event was a one-time error or pattern of behavior, as well as rewarding those who make positive financial decisions. Complete credit reports can help people with less than excellent credit scores improve their credit history and get credit approved.
How opening a savings account can impact your credit score
When it comes to opening a savings account, there is very little risk of damaging your credit score as noted above.
The most pressing concern may be the impact of a credit check. Fortunately, savings account and bank account providers don’t do serious credit inquiries with new customers. This means Australians with below average credit scores can still open a savings account.
Credit checks take place when you apply for credit products, such as a home loan, personal loan, or credit card. They can also occur when you sign up as an account holder to pay for various utilities, such as an energy bill, gas bill, or even a phone plan.
Plus, once you’ve been approved for a savings account, using the savings account responsibly can help improve your credit score. Due to complete credit reports, making regular deposits there can be considered a positive event and can be reported in your credit history.
Using a savings account to build a nest egg can show lenders that you not only have financial discipline, but could pay an overdue bill in the blink of an eye. Try to make regular savings deposits for several months without dipping into them and see if your credit score improves.
There may be more heavily weighted positive events that you can pursue if you are looking to increase your credit score. This can include paying off overdue credit card statements and paying your bills on time.
If you want to check your credit score without a serious credit check, consider using RateCity’s credit score checker. Get a free copy of your credit scores today from the two major reporting bureaus, Experian and Equifax.