Re: Can changing bank accounts effect credit rating?

smartsaver2011

Hi There,

I have worked hard to improve my credit rating and have been with Halifax for over 3 yrs now. I have worked out the benifits and First Direct seem better as I earn over £23k and would benefit the bonus. The only benifit of halifax reward is the free roadside however I work in insurance so if necessary I can always sort my own out.

My only concern is that when I have applied for credit cards or a mortgage they always ask how long you have been with your bank so can it be a negative if you open a new account?


Thanks

x

Paul_Herring

If you keep the first account open (it's always a good idea to have two current accounts available anyway) you can still honestly say you've been with the Halifax for X years.

Just make sure you still use the account for something ('pocket money' or a low value direct debit - just make sure you sufficiently fund the account with a standing order from the new account.)

anniecave

Yes, length of time you've been with the current account provider in question does affect your credit rating. You could do as the above poster suggests, run two accounts together, but you have to be careful that you have money in in relevant account to pay for any direct debits etc.

If you live in the same place for a few years, and especially be the owner of a home, it won't make much difference to you, however if like me you are in rented accommodation moving around every couple of years, then it will make more difference to your credit rating.

smartsaver2011

thanks it's worthwhile people are aware of this as so many people switch to save money but it can be a negative as you said! xx

masonic

Having successfully opened both credit card and current accounts after answering that I've been with my bank less than a year, I can't believe it has a significant impact. The years of detailed credit information unearthed during the credit check must be much more important than how loyal you have been to a particular bank.

ses6jwg

It most definitely does have an impact and will not so much affect your "Credit score" per-se but will affect your internal behavioural scoring with the bank.

e.g. my current bank refused me a credit card when I first opened my current account and an overdraft. 6 months of a well-managed account now means a credit card with 3.4k credit limit (pre-approved- wasnt even credit scored for it) and an OD of £1500 if i ever want one.

Dr_Cuckoo3

ses6jwg wrote: »

It most definitely does have an impact and will not so much affect your "Credit score" per-se but will affect your internal behavioural scoring with the bank.

Perhaps I am mistaken , but I do not think smartsaver2011 or masonic are considering applying for credit cards etc at banks with whom they already hold an account (I am thinking MBNA , Capital One etc)

internal behavioural scoring does not affect applicants who are not a customer of the bank they are applying to (until they become a customer)

ses6jwg wrote: »

e.g. my current bank refused me a credit card when I first opened my current account and an overdraft. 6 months of a well-managed account now means a credit card with 3.4k credit limit (pre-approved- wasnt even credit scored for it) and an OD of £1500 if i ever want one.

Of course they scored you - using Experian Delphi score http://www.annualcreditreport.co.uk/help/jargon/delphi.htm

They may well have probed you using Experian Probe SM http://www.experian-da.com/solutions/probe.html too :eek:

You appear blissfully unaware of this , I doubt that you know your behaviour score at the Bank you work at either

FLAPJACK

I had a ID AWARE alert email from Lloyds the other week...couldn't see anything untoward on the credit file except my score had dropped 20 odd points!

Called them and had a very informative conversation inwhich I was told the score has reduced as "you have opened 3 new current accounts with lloyds"..you guessed it VANTAGE!, apparently they watch the new accounts for a period of three months to see how you operate them...I told them that basically they are savings accounts....I was told to watch for the increase in the credit score later in the spring!

Also while I was looking at the credit file I noticed that a car loan (which started last June) didn't appear, I bought this up and was told that it's upto the loan provider to inform the three credit reference agencies of new loans, sometimes they will only inform one. Obviously this means that a future lender may choose to look you up using the agency thats HASN'T been told of your exsisting loan....thereby not showing that you have a good repayment record....in turn because of that you could be declined. I was told that it may be an idea to inform the car loan lender that I want the record of the loan on all three agencies.
So in a nutshell opening or changing current A/c's can affect your rating at the outset.

masonic

Dr_Cuckoo3 wrote: »

Perhaps I am mistaken , but I do not think smartsaver2011 or masonic are considering applying for credit cards etc at banks with whom they already hold an account (I am thinking MBNA , Capital One etc)

Indeed I wasn't. If you already hold accounts with the bank in question, then the question need not be asked since the bank will know perfectly well how long you have banked there.

My one experience of applying for a credit card with a bank where I already held a current account was that I didn't have to fill out a formal application and was just sent through the paperwork to sign. However, it's very rare a bank offers a good deal for more than one type of product, so this isn't something I'm likely to encounter very often.

rb10

smartsaver2011 wrote: »

The only benifit of halifax reward is the free roadside however I work in insurance so if necessary I can always sort my own out.

If it's not worthwhile you paying for the Ultimate Reward account, you can always switch to Halifax's Reward account. They'll still pay you £5 per month, but there's no monthly fees for that account.

As you'd be keeping the same account (same debit card, account number, etc), there'd be no credit record impacts.