Does switching banks affect your credit score?

Switching banks has been made easier than ever, but could it harm your ability to be approved for credit in the future?

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Fact checked

Switching banks will have an impact on your credit score, as your new bank will run a credit check before approving your application.

Will switching banks be visible on my credit file?

The fact you switched banks won’t appear on your credit file, but the credit check will be visible for up to seven years.

Will switching banks affect my chances of getting a loan?

A credit check will reduce your credit score, although among most lenders the impact on your score is believed to be minimal.

Certainly, being credit-checked for a new bank account won’t be as harmful as missing a payment to a company you owe money to.

If you apply for an overdraft with your new bank account, this may impact your ability to get a loan, as lenders will consider the amount of credit you already have access to. The more credit you can already access, the tougher it will be to get more.

Some banks will offer you the opportunity to apply for their credit card at the same time as switching banks.

This may involve a second credit check, as well as giving you greater access to credit. Both of these factors will affect your chances of getting a loan.

If you’re planning on applying for a big loan in the near future, it’s a good idea not to switch banks until after this loan has been approved.

Multiple credit checks in a short period of time is considered a red flag by many lenders, so switching many times could be more likely to impact your chances of being approved for future loans.

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Using the 7-day switching service

It’s efficient to switch banks using the seven-day switching service. This cuts down hassle as your new bank organises everything.

It also reduces the chances of an error being made switching your direct debits and standing orders.

If you miss a direct debit payment as a result of a botched switch, this will harm your credit report.

Do

  • Search for the best deal before switching banks
  • Switch using the seven-day switching service

Don’t

  • Apply for an overdraft or credit card if you don’t need it
  • Switch banks too regularly
  • Switch banks if you’re about to apply for a large loan

Robert's loan application and his credit score

In the middle of saving for a mortgage deposit, Robert discovered a bank account which paid a better interest rate on in-credit balances.

He was aware that switching banks would affect his credit score slightly, but as he didn’t plan to apply for at least a year, he decided the extra interest was worth switching for.

The added interest helped him save for a mortgage deposit quicker, and his mortgage application was still approved, due to all the other actions he was taking to improve his credit score.

The bottom line

Switching bank accounts does affect your credit score, but the impact is typically so minimal that you should only worry about it if you’re about to apply for a mortgage or a big loan.

Frequently asked questions

How different factors can affect your credit score

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