Does switching bank affect credit score?

Does Switching Bank Affect Your Credit Score?

Switching banks can be a great way to get better services, better rates, and more features. But when it comes to your credit score, is switching banks a good idea? The short answer is yes, but it’s important to understand how switching banks can affect your credit score.

How Does Switching Banks Affect Your Credit Score?

When you switch banks, the new bank will likely run a credit check on you. This will cause a “hard enquiry” on your credit report and could potentially lower your credit score by a few points. However, this impact is usually temporary and should not have a long-term effect on your credit score. 

In addition to the hard enquiry, switching banks can also affect your credit score in other ways. For example, if you close an old account with the old bank and open a new one with the new bank, this could lead to changes in your average account age or utilisation rate. These changes could have an impact on your credit score as well. 

What Should You Do Before Switching Banks? 

Before you switch banks, it’s important to make sure that doing so won’t have an adverse effect on your credit score. Here are some tips for making sure that switching banks won’t hurt your credit: 

1. Check Your Credit Report:

Before you switch banks, make sure that you check your credit report for any errors or inaccuracies that could be affecting your score. If there are any errors or inaccuracies, make sure that you dispute them with the appropriate agencies before switching banks so that they don’t negatively affect your score further. 

If you are yet to check your credit report, you can get paid for checking it on TopCashback* or Quidco* - simply search for “Credit Scores”.

2. Keep Old Accounts Open:

If possible, try to keep your oldest accounts open even after you switch banks. This will help maintain the average age of accounts on your report and keep utilisation rates low which can help maintain or improve your overall credit score. 

3. Monitor Your Score:

After switching banks, make sure that you monitor your credit score closely to ensure that it isn’t negatively affected by the change in banks too much, there will be a small drop so be prepared for that. If there is an unexpected drop in your score after switching banks, contact both the old and new bank to see if they can help resolve any issues related to the change in banking institutions. 

Should You Switch Banks? 

The decision of whether or not to switch banks should ultimately come down to what services and features best meet your needs as a consumer and how much those services cost compared to other banking options available to you. While there may be some minor impacts on your credit score when switching banks, these impacts should be temporary and shouldn’t have long-term effects if managed properly before making the switch.

Check out the latest bank switching offers available in the UK here.