Closing a checking or savings account usually doesn’t hurt your credit score. Banks don’t normally send deposits, withdrawals, or voluntary account closures to Equifax, Experian, or TransUnion.
Problems can still arise when an account closes with an unpaid negative balance or an automatic debt payment fails after the closure. Either issue may lead to collection activity, late payments, or a negative banking record.
Here is how closing a bank account may affect your credit score, ChexSystems’ role in the process, and how to close an account without creating financial problems.
Key Takeaways
- Closing a bank account doesn’t directly impact your credit score, as activities associated with checking and savings accounts aren’t reported to the major credit bureaus.
- Outstanding balances or overdraft fees on a closed account can hurt your credit score if sent to collections, leading to a negative mark on your credit report.
- To avoid credit score issues, ensure all balances are cleared, pending transactions are settled, and subscriptions or auto drafts are canceled before closing a bank account.
Does Closing a Bank Account Affect Your Credit Score?
Closing a checking or savings account doesn’t have the same effect as closing a credit card. A bank account holds your money. It doesn’t give you access to borrowed funds.
Your credit score comes from information listed on your credit report. The three major credit bureaus are Equifax, Experian, and TransUnion.
Credit scoring models may consider:
- Payment history: Shows whether you paid credit cards, loans, and other debts on time.
- Credit utilization: Measures how much revolving credit you use compared with your total available credit.
- Credit history: Looks at how long your credit accounts have been open.
- Credit mix: Considers the different types of credit accounts on your credit report.
- Recent applications: Includes hard credit inquiries tied to certain credit applications.
Checking and savings accounts don’t affect these credit score factors. Closing an old bank account also doesn’t shorten your credit history.
Your credit utilization ratio will not change either. Credit use applies to revolving credit accounts, such as credit cards, rather than deposit accounts.
Does Opening a New Bank Account Affect Your Credit Score?
A bank may review your banking history, identity, or credit history when you apply for a new account. That doesn’t mean every bank account application will hurt your credit score.
Many banks check ChexSystems or Early Warning Services. Others may complete a soft credit inquiry, which doesn’t affect your credit score.
A hard credit inquiry is less common for a standard checking or savings account. Ask the bank which type of review it will complete before you apply.
You can learn more about the difference between a hard and soft credit inquiry.
How Closing a Bank Account Can Hurt Your Credit Score
The closure itself doesn’t lower your credit score. Problems may arise when money remains owed or a payment fails after the account closes.
The two main risks involve collection accounts and missed debt payments.
An Unpaid Negative Balance Goes to Collections
A bank account may have a negative balance because of overdrafts, monthly fees, returned deposits, or transactions that post after you remove the remaining money.
The bank may request payment after the account closes. It may send or sell the debt to a collection agency if you don’t pay.
The collection agency may send the account information to the credit bureaus. The collection account may then appear on your credit report and hurt your credit score.
A collection account can generally remain on your credit report for about seven years from the original delinquency date. The effect depends on the credit scoring model and the rest of the information in your credit report.
Banks and credit unions may have different fees, account policies, and membership requirements. Review this comparison of credit unions and banks before you move your money.
An Automatic Debt Payment Fails
A closed bank account may still be connected to automatic payments for a credit card, mortgage, auto loan, personal loan, or another debt.
The payment may fail after the account closes. The creditor may charge a returned payment fee or mark the payment as late.
A payment that becomes at least 30 days late may appear on your credit report. That late payment can hurt your credit score even though the bank account closure had no direct effect.
Update every automatic debt payment before you close the old bank account. Confirm that each creditor has processed at least one payment from the new bank account.
Can You Close a Bank Account with a Negative Balance?
A bank may refuse to close an account at your request until you repay the negative balance. The bank may also close the account on its own and continue to seek payment.
Contact the bank as soon as you notice the negative balance. Ask for the exact amount required to bring the bank account to zero.
The total may include:
- Overdraft fees: Charges tied to payments that exceeded the available balance.
- Returned payment fees: Charges for payments the bank could not complete.
- Monthly fees: Account fees that posted before the closure.
- Other charges: Fees listed in the bank account agreement.
You can ask whether the bank will waive any fees. The bank doesn’t have to approve the request, but it may remove a fee for a customer with few past account problems.
Pay the balance as soon as possible. Request written confirmation after the payment posts and the bank account reaches a zero balance.
How Closing a Bank Account Affects ChexSystems
ChexSystems collects information about checking and savings account activity. Banks and credit unions may review a ChexSystems consumer report when you apply for a new bank account.
ChexSystems is separate from Equifax, Experian, and TransUnion. Information in a ChexSystems consumer report doesn’t directly affect your traditional credit score.
When a Bank Account Closure May Be Reported
A voluntary closure of an account in good standing usually doesn’t create a negative ChexSystems entry. Problems are more likely when a bank closes the account because of unresolved account activity.
Common reasons include:
- Unpaid negative balances: Money remains owed after the bank account closes.
- Repeated overdrafts: The bank account has frequent overdrafts or returned payments.
- Suspected fraud: The bank believes the bank account was connected to fraud or identity theft.
- Account misuse: The customer violated the bank’s account terms.
- Returned deposits: Checks or other deposits were returned without payment.
Negative information can remain in a ChexSystems consumer report for up to five years. The record may make it harder to open another checking or savings account.
ChexSystems vs. Early Warning Services
ChexSystems isn’t the only company that tracks bank account history. Early Warning Services also provides account screening information to banks and credit unions.
A financial institution may review one or both consumer reports before it approves a new bank account.
Neither consumer report directly determines your traditional credit score. However, negative information may still affect your ability to qualify for a bank account.
What to Do After a Bank Account Denial
Ask the bank which consumer reporting company it used. You can then request a copy of the consumer report and review each entry.
Dispute any information that is inaccurate or incomplete. Include account statements, payment confirmations, or closure records that support your position.
Consumers who can’t qualify for a standard bank account may still have options. These bank accounts for bad credit may have more flexible approval requirements.
Voluntary vs. Involuntary Bank Account Closures
Who closes the bank account can affect what happens next. A customer-requested closure usually creates fewer problems than a closure initiated by the bank.
Voluntary Bank Account Closures
A voluntary closure occurs when you ask the bank to close your bank account. You may switch banks because you found lower fees, better interest rates, closer branches, or better customer service.
A voluntary closure usually causes no credit score or ChexSystems problem when the bank account has a zero balance and no unresolved transactions.
Make sure you follow the bank’s formal closure process. An empty bank account may remain open and continue to collect fees.
Involuntary Bank Account Closures
An involuntary closure occurs when the bank ends the account relationship. Common reasons include unpaid overdrafts, suspected fraud, returned deposits, or account policy violations.
The closure doesn’t always affect your credit score. The bank may still report the bank account to ChexSystems or another checking account consumer reporting company.
An unpaid balance may also reach a collection agency and appear on your credit report.
What to Do if the Bank Closes Your Account
Contact the bank and ask why the bank account closed. Confirm whether you owe money and whether any deposits or payments remain pending.
Ask the bank:
- Balance owed: Confirm whether the bank account has a negative balance.
- Remaining funds: Ask how and when the bank will return any money left in the bank account.
- Pending transactions: Confirm how the bank will handle checks, transfers, or debit card transactions.
- Consumer reporting: Ask whether the bank sent information to ChexSystems or another company.
- Written records: Request a letter that explains the closure and final balance.
Keep every notice and account statement. These records may help if you need to dispute inaccurate information later.
How to Close a Bank Account Without Hurting Your Credit
Do not withdraw all your money and assume the bank account will close automatically. An empty bank account may remain open and continue to collect fees.
Move your banking activity first, wait for all transactions to clear, and then submit a formal closure request.
Set Up Your New Bank Account
Open and test the replacement bank account before you close the old one. Make sure you can deposit money, make payments, and access your funds.
Complete these steps first:
- Move direct deposits: Update payroll, government benefits, tax refunds, and other recurring deposits.
- Update automatic payments: Move subscriptions, insurance payments, loan payments, and utility bills.
- Review recent statements: Check several months of activity for quarterly or annual charges.
- Confirm the changes: Make sure deposits and payments have started using the new bank account.
Don’t rely on memory alone. A forgotten payment can create a returned payment fee or a late payment.
Wait for Pending Transactions to Clear
Transactions may still post after you stop using the bank account. These may include debit card holds, electronic transfers, checks, and scheduled payments.
Keep enough money in the bank account to cover every expected transaction. A small temporary cushion may also protect you from a forgotten charge or final fee.
Wait until all paper checks have cleared. A bank may reject a check that arrives after the bank account closes.
Save Your Bank Account Records
Download any records you may need before the bank removes your online access.
Save copies of:
- Monthly statements: Keep records of deposits, withdrawals, fees, and balances.
- Tax forms: Download interest statements and other tax documents.
- Transaction history: Save records that may help with taxes, disputes, or budgeting.
- Payment confirmations: Keep proof that you paid outstanding fees or negative balances.
- Closure requests: Save emails, letters, or confirmation numbers tied to the bank account closure.
Keep these files in a secure location. You may lose online access soon after the bank account closes.
Submit a Formal Closure Request
Transfer the remaining money after all expected transactions have posted. Then follow the bank’s account closure process.
The bank may let you close the bank account online, by phone, in person, or through a written request.
Ask for written confirmation that the bank account closed with a zero balance. Review the final statement to make sure no later fees or transactions appeared.
For more detailed instructions, read our guide on how to close a bank account.
What to Do if a Closed Bank Account Goes to Collections
A collection notice may mean that the bank believes you left an unpaid balance. Do not ignore the notice, even if you think the amount is wrong.
Review the debt before you make a payment or agree to a payment plan.
Confirm That the Debt Is Accurate
Request written information from the collection agency. Compare the amount with your final bank statements, payment records, and closure confirmation.
Check that:
- The bank account belongs to you: The notice should identify the correct bank account.
- The amount is correct: Fees, payments, and credits should match your records.
- The collection agency has authority: The company should explain who owns the debt.
- The dates are accurate: The account history should match the date the bank account closed.
Contact the bank if you don’t recognize the amount. A final fee or returned payment may explain the balance.
Dispute Incorrect Information
Dispute the debt if the amount is wrong, the bank account doesn’t belong to you, or the bank failed to record a payment.
Send copies of documents that support your position. Keep the original records for your files.
You should also dispute inaccurate collection information with each credit bureau that shows it on your credit report.
Review all three credit reports because the collection account may not appear with every credit bureau.
Resolve a Valid Balance
Contact the bank or collection agency when the amount appears accurate. Ask whether payment must go through the collection agency or whether the bank can still accept it directly.
Get any payment agreement in writing before you send money. Keep proof of the payment after the debt is resolved.
Check your credit reports later to confirm that the collection account shows the correct balance and payment status.
Paying the balance doesn’t always remove the collection account from your credit report. The entry should no longer show an unpaid balance after the payment posts.
Final Checklist Before Closing a Bank Account
A final review can help prevent returned payments, fees, and unpaid balances.
Before you close the bank account, confirm that:
- All direct deposits have moved to the new bank account.
- All automatic payments use the new bank account.
- Outstanding checks have cleared.
- Pending debit card transactions have posted.
- The old bank account has a zero balance.
- You have downloaded the statements you need.
- The bank has confirmed the closure in writing.
- Your final statement shows no amount owed.
Bottom Line
Closing a checking or savings account in good standing doesn’t normally hurt your credit score. Deposit account activity doesn’t appear on traditional credit reports.
Credit problems may arise if you leave an unpaid negative balance or miss a debt payment after the bank account closes. Banking problems may also appear in a ChexSystems or Early Warning Services consumer report.
Move every deposit and payment, wait for pending transactions, bring the bank account balance to zero, and complete the bank’s formal closure process. Keep written confirmation as proof that the bank account closed without money owed.
