Does opening a savings account affect your credit score?

Quick insights

• Opening a savings account does not directly affect your credit.
• Savings accounts aren’t forms of credit, so account activity doesn’t impact credit scores or appear on credit reports.
• Your savings contribute to your overall financial health, which might keep you out of situations that could hurt your credit.

When learning about your credit score, a common misconception is that your score is directly affected by your savings account. That’s not the case, strictly speaking. In this article, we’ll set the record straight.

The connection between a savings account and your credit score

The act of opening a savings account does not have a direct impact on your credit score. This is because a savings account is not a form of credit. As a result, account activity does not appear on your credit report either.

The role of hard inquiries in credit scores

A hard inquiry, also known as a hard credit check, occurs when your credit report is checked. This is typically part of a decision-making process for a loan or credit application. A hard inquiry may lower your credit score temporarily by several points.

Opening a savings account does not require a hard inquiry to your credit report and, therefore, does not affect your credit score. Savings accounts are not considered lines of credit and do not involve borrowing or repayment, which are two key factors influencing credit scores. When opening a savings account, some banks may perform a check to access your credit worthiness, but that check doesn’t typically impact your credit score.

How do savings accounts affect credit score indirectly?

Savings accounts are powerful tools for a variety of needs and wants, from vacations and large purchases to unexpected bills and emergencies. While opening a savings account does not affect your credit score, your savings habits might affect your credit indirectly.

Maintaining a savings account can offer you a financial safety net. This may be useful in emergencies when you might otherwise rely on loan applications or miss a payment, both of which risk negatively impacting your credit score.

The potential disadvantages of opening a savings account

Some savings accounts come with fees and minimum balance requirements, which can hurt your savings. The number of withdrawals and transfers from savings accounts might be limited, which could impact how you prefer to manage your money.

It’s important to read and understand the terms and conditions of a savings account before opening one.

Does it hurt your credit score to close a savings account?

Closing a savings account does not hurt your credit score. Savings accounts are not considered lines of credit and do not appear on your credit report.

In summary

Opening a savings account does not increase or decrease your credit score. Your activity on loans and lines of credit has a greater impact on your credit. However, access to savings can help you manage your finances more effectively. This can indirectly impact your credit by ensuring you have money to pay bills on time, which helps to build and maintain credit.