Nerdwallet: “Does Closing a Bank Account Affect Your Credit?”
Oct. 21, 2022, Nerdwallet — Marguerita Cheng, CFP® Pro, is featured in today’s article by Ruth Sarreal who explains, “Closing an account doesn’t hurt your credit, but there are steps you should take to ensure your credit stays unaffected when you do so.”
Here’s what Marguerita suggests consumers should be on the lookout for:
- Your credit score could drop if your bank account isn’t in good standing: Some blemishes in your bank account history could affect your credit. For example, if you close an account while the balance is negative or a bank closes your account because it’s overdrawn for an extended period, the negative balance could go to a third-party collection agency. That could lead to your credit report being marred. “If the bank sends this outstanding debt to a collection agency, it could be reported to any of the three credit bureaus,” Marguerita Cheng, certified financial planner and CEO of Blue Ocean Global Wealth in Gaithersburg, Maryland, said in an email. “Collections can trigger a drop in your credit score.”
- Settle any balances on your old account: You should leave some cash in your old account to cover any pending transactions you might have overlooked, Cheng said. You can also contact your bank to ask if you have any outstanding balances. If you opened an account to take advantage of a cash bonus, make sure your account has been open for the minimum time required to avoid an early closure penalty fee.