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According to the Consumer Financial Protection Bureau, your bank account information is not included in your credit reports, however, if you are not careful, closing it improperly could affect your score.
In general, closing a bank account does not affect your credit score. However, if you do not take care of certain details, it is possible that this decision will end up affecting your impeccable credit history.
The Consumer Financial Protection Bureau notes that the three major credit bureaus (Experian, Equifax, and TransUnion) typically don’t include your checking account history in your credit reports. Simply put, closing a bank account has no direct impact on your credit.
However, this sentence is not infallible, since some aspects of the misuse of your bank account could end up affecting your credit score, if you do not take care of certain details when closing the account.
For example, if you close an account while the balance is negative, or if a bank closes it because it’s overdrawn for an extended period of time, that contrarian balance could go to an outside collection agency. If that happens, then it’s possible that information, which is actually a debt to your bank, could end up on your credit history and hurt your score.
But the experts clarify that this can happen only and exclusively if the bank sells the debt to an external collection agency. As long as the debt is kept within the banking institution and is paid on time, your credit score will remain intact.
How to close your bank account without affecting your credit score?
Basically, if you don’t have a negative balance in your bank account, then you shouldn’t have any problem closing it, much less should it affect your credit score.
However, if you want to make sure that closing your account does not reach your credit report, we detail the correct way to close your bank account.
Make a list of recurring deposits and withdrawals
If you usually have scheduled direct deposits or direct debit payments in your bank account, it is important that you have them clear so that you can make the pertinent adjustments. You may not have a negative balance in your bank account, however, if you have direct debit payments to your credit card, loans or other services, you may be overconfident if you close your bank account and that would be another way to affect your score, without realizing it
Open a new account and change your automatic transactions
Before closing a bank account, we recommend opening another one so you can transfer all your funds. Also, since you made the list of recurring deposits and payments, contact each of the companies in charge of deposits and withdrawals to give them the information of your new account and that you do not have delay problems, both to receive some money that you belongs enough to make a payment that could affect your credit score.
Pay off your balances
Check with your bank if you do not have outstanding balances with the institution for fees that are not clear to you, such as an overdraft fee, for example. Also if you opened an account to take advantage of a cash bonus, make sure your account has been open for the minimum amount of time required to avoid an early closure penalty.
Close your account and confirm the closure
After you make sure that you don’t have any debits, that you haven’t left any funds in your old account, and that you have no pending transactions on it, you can freely close your account. You may be able to complete the closing online. The bank may send you an email to confirm the account closure, or you may contact a representative by phone or in person to confirm the account has been closed and request written confirmation.
Even if your account is closed, if you earned interest or any cash bonuses during the year, the bank should send you the proper documentation for your tax filing.