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Bank accounts generally aren’t included in credit reports, which means that your banking activity (including opening and closing accounts) won’t have any direct impact on your credit scores.
That said, having a negative balance when a bank account is closed could hurt your credit scores if the bank sends that balance to collections. Here are key things to consider before closing your bank account to ensure it doesn’t end up causing any credit-related issues.
Key Points
• Closing a bank account doesn’t directly affect your credit score because credit reports track your borrowed money, not checking or savings accounts.
• A closed account can hurt your credit if remaining overdrafts or unpaid fees create a negative balance that the bank then sends to collections.
• It’s important to remember to update any automatic bill payments that come out of the account you will be closing.
• Banks may use your existing relationship when deciding whether to approve credit or loans, and closing an account could remove that advantage.
• You can avoid credit issues by following a proper account-closing process.
How Bank Accounts Relate to Credit
The three major credit bureaus (Equifax®, Experian®, and TransUnion®) maintain reports on how consumers manage borrowed money. As a result, your credit report will contain information on your credit accounts, such as mortgages, personal loans, and credit cards, including balances and payment history.
Information about your bank accounts, such as your checking account, is not typically included. As a result, closing an account in good standing won’t hurt (or build) your credit score. If, however, you close a bank account with a negative balance or unpaid fees, the bank may send those debts to a collection agency, which can report the delinquency to the credit bureaus.
An overdrawn account can also get reported to ChexSystems, a reporting agency for the banking industry. ChexSystems tracks your deposit and debit history. This information stays on your ChexSystems report for five years and banks and credit unions may use it when deciding whether to approve bank account applications. Closing a bank account in good standing, however, won’t put a negative mark on your ChexSystems report.
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Reasons a Closed Account Could Impact Credit
While closing a bank account doesn’t directly affect your credit score, there are some situations when it could negatively impact your credit.
Charged-Off Debt Sold to Collections
If you close a bank account with an outstanding negative balance (which could happen if you overdraw the account or get hit with unexpected bank fees), the bank may charge off the debt after a period of nonpayment.
A charge-off means the bank has written off a debt because it does not believe it will receive the money that it’s owed. Banks generally sell charged-off debts to collection agencies, which can then report the unpaid debt to the credit bureaus. If an account in collections ends up on your credit report, it can drag down your score and stay there for up to seven years.
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Closing an Account Used to Pay a Credit Card or Loan
If you close a checking account that was set up to make automatic payments to your credit card bill or monthly loan, and you don’t make another arrangement to pay your bills, you could end up missing a payment. Payment history has the biggest impact on your credit scores, so going 30 days or more past due can harm your score. On top of that, your creditor may charge you a hefty late fee.
You Want to Apply for a Credit Card or Loan With the Same Bank
For some institutions, having a checking or savings account in good standing could help you get approved for a credit card, mortgage, car loan, or other type of credit. If you close your account, you end your relationship with the bank, and you could lose this advantage.
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Protecting Your Credit When Closing Accounts
To ensure that closing your bank account does not hurt your credit, you’ll want to follow these simple steps.
1. Open Your New Account
It’s important to have a new checking account in place before you close your old one so that you have a place to transfer direct deposits, payments, and debits. Take your time and do your research when choosing a new bank account. There are several factors to consider, including rates, fees, account offerings, and whether you’d prefer a traditional brick-and-mortar institution or an online-only bank.
2. Switch Your Recurring Payments and Direct Deposits
Next, you’ll want to make a list of all of the recurring payments and direct deposits you have set up, then move them to the new account. You can typically change banking information with service providers and creditors online. To avoid having your direct deposit go to a closed bank account, check with your employer to see if there are any forms you need to fill out for direct deposit so they can reroute your paycheck.
3. Pay Off Any Outstanding Balances
Before closing your old account, pay off outstanding balances, including any overdrafts or fees you owe the bank. Clearing a negative balance will prevent the bank from taking further action to recover the funds, which could negatively impact your credit. You’ll also want to leave some cash in your old account to cover any pending transactions you might have overlooked.
4. Close Your Old Account
Once you’re sure that any automatic bill payments are now coming from your new account, all direct deposits are going in, and there are no outstanding checks, you can transfer any leftover money to your new account and close your old account. Depending on the bank, you might be able to close your account online, or you may need to mail a form, visit a branch, or call to close it.
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When Closing an Account Makes Sense
There are several valid reasons to close a bank account. Here are a few scenarios where closing an account might be the right decision.
Moving
If you are moving to a new location, especially if it’s far from your current bank, closing your account and opening a new one that has more conveniently located branches could make sense. Some brick-and-mortar banks operate regionally, and once you move out of the area, you may not have access to branches or in-network ATMs.
High Fees
Banks often charge various fees, including monthly maintenance fees, ATM fees, and overdraft fees. If your current bank charges high fees and you can find a bank with lower or no fees, closing your account and switching to the new bank can save you money in the long run.
Low Interest Rates
If your savings account is earning the average national rate, which is 0.39% APY, as of February, 2026, it can be well worth making the switch to a high-yield savings account that may pay about 3.00% APY or more. Many online banks can offer competitive yields on savings accounts because they don’t incur the cost of maintaining physical branches and can pass along the savings to customers in the form of higher rates.
Poor Service
If you are dissatisfied with the service provided by your bank, such as limited or lackluster customer service, switching to a bank that better meets your needs can improve your banking experience.
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Alternative Options Besides Closing
If you are hesitant to close your bank account due to potential complications, here are some alternatives to consider.
Switch to a No-Fee Account
Many banks offer no-fee or low-fee account options. Switching to one of these accounts can help you avoid high fees without potentially needing to close your current account. This can be particularly useful if you want to maintain a long-term banking relationship.
Negotiate Fees
Sometimes, banks are willing to waive certain fees or offer fee reductions if you ask. Contact your bank’s customer service department to discuss your concerns and see if you can negotiate better terms. Banks typically value customer loyalty, and they may accommodate your request to retain your business.
Keep It Open, But Don’t Let It Go Dormant
If you want to keep an account open but rarely use it, you’ll want to be sure to maintain some activity to avoid letting it go dormant. When an account has been inactive for an extended period, it may become the unclaimed property of the state. You can avoid this problem by occasionally withdrawing or depositing cash into the account, periodically using your debit card to make small purchases, or signing up for one auto payment (just make sure to keep a high enough balance to cover it).
The Takeaway
Closing a bank account does not directly affect your credit score, as checking and savings accounts are not reported to credit bureaus. However, if you close an account with unresolved issues, such as outstanding balances or overdraft fees, it can lead to negative marks on your credit report if the bank turns the debt over to collections.
By understanding the potential impacts of closing your bank account and taking proactive steps, you can close it and begin using your new account without any negative impact on your credit.
Interested in opening an online bank account? When you sign up for a SoFi Checking and Savings account with eligible direct deposit, you’ll get a competitive annual percentage yield (APY), pay zero account fees, and enjoy an array of rewards, such as access to the Allpoint Network of 55,000+ fee-free ATMs globally. Qualifying accounts can even access their paycheck up to two days early.
FAQ
Can I reopen a closed bank account?
It depends on the bank’s policies and the reason for closure. If the account was closed recently and in good standing, you may be able to reopen it by contacting customer service. However, if the bank closed the account due to issues such as overdrafts or fraud, reopening might not be possible.
How long does a closed account stay on my record?
A closed bank account doesn’t appear on your credit report, but closed loan or credit card accounts can stay for up to 10 years. If you close a bank account with a negative balance and don’t repay the debt in a timely fashion, the bank may send your debt to a collection agency. If reported to the consumer credit bureaus, a collection account can stay on your credit report for up to seven years.
Will my credit score increase when I close unused bank accounts?
No. Closing a checking or savings account will not affect your credit score on its own because these types of accounts are not taken into consideration when calculating your credit score.
Photo credit: iStock/Drazen Zigic
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