Credit Score Basics > Does having too many current accounts affect credit score?

Does having too many current accounts affect credit score?

Wollit TeamUpdated 17th September 2024

Simply having many current bank accounts does not affect your credit score. However, opening many bank accounts in a short period of time, especially if they come with an overdraft, can actually lower your score. Here is how it works and what you can do about it.

What is a current account?

A current account is a type of bank account used for everyday money management. It basically lets you deposit and withdraw money, pay bills, and set up automatic payments.

Most current accounts are free to open, but some may charge fees for overdrafts or other services.

Why do people open multiple current accounts?

People may open more than one current account for a few reasons:

Some banks offer higher interest rates on savings.
Banks often give cash bonuses or rewards for switching accounts or keeping a certain balance.
Some people like to use different accounts to manage their money better, like having one for bills and another for spending.

How does opening a current account affect my credit score?

When you open a new current account, banks usually check your credit history. There are two types of credit checks:

Soft credit checks, which don’t affect your credit score and are often used to simply verify your identity or eligibility for a product.
Hard credit checks, which can actually lower your credit score temporarily and will show up on your credit report.

Most banks run a hard credit check when you apply for a standard current account with an overdraft. While this may only have a small impact on your score at first, too many hard checks can make lenders think you might be in financial trouble.They might think you’re struggling financially, which could make them less likely to approve future loans or mortgages. If you plan to apply for something big like a mortgage soon, it’s best to limit how many new accounts you open beforehand.

What should I do if I have too many current accounts?

As we mentioned, simply having multiple accounts won’t hurt your score. If you want to open a new one, for whatever reason, the impact won’t be significant either. And if you want to be completely safe, you can just open a basic bank account or an e-money account.

These accounts do not offer overdrafts but still offer all the other functions of a traditional bank account.

At the end of the day, what matters for your credit score is how you handle credit. This is why it’s so important to build a history of timely debt payments.

There are a number of tools you can do for this, and one such tool is Wollit.

Wollit is an app that reports your monthly subscription as loan repayment to the credit reference agencies, helping you build your credit history and potentially improving your credit score.

On top of this, Wollit can also report your monthly rent payment to Experian, adding another line in your credit report that shows lenders you're responsible and pay your bills on time.