Switching bank affecting Credit Score?

phoenixexodus

Hello,
I heard that switching bank account is affecting credit score. Is that true? I bank with my current bank 12 years and I do not want to ruin it to get 100 pounds for switching...
Thanks

Ben8282

Switching your bank account could potentially have the following negative effects on your overall credit rating:
1. A hard search.
2. The addition of a new account.
3. Reduction in overall age of your credit accounts.
4. The need to show a shorter time in answer to the question 'time with bank' when making applications for credit. Today your answer would be 12 years. Next month if you switch you will have to answer 1 month.
The degree to which any of these negative factors will affect your credit rating will depend on your individual circumstances.
Be aware also that the 12 year relationship that you have built up with your current bank will be lost and you will be starting from scratch with a new bank. This could be good or bad depending on how you have conducted your accounts with that bank over the last 12 years.
Only you can decide if it is worth it for £100.

PrettyFlower90

Forget about your credit score, it doesn't really mean anything on it's own. Switching bank accounts will mean a hard search on your file, a different account on your credit file as well. However, in most cases this will have zero impact on your life. I have switched between all the banks to earn nearly £1k of bonuses etc and I'm still able to get accepted for credit e.g. new credit cards. Should you do it if you're about to apply for a mortgage? Probably not, as you'll not have a long standing bank account to get statements from etc. But if you're not planning on any major credit application in the near future, can't see any negative in it.. loyalty doesn't pay anymore.

PixelPound

It won't ruin it, but it may have a negative effect, such as if it's your longest account and you don't have accounts of a similar age. What's the reason it isn't worth £100 to have your score reduce? Why have you chosen that as your first post, it does seem rather random. Do you also pay a subscription to the CRA's to keep a check on it. After all if it's not worth £100 to have it reduced as a result then it's worth £14.99 a month to ensure you always know it's up there.

I'm in the process of switching banks, from an account that I have had for 14 years (I only have the one current account), as it's the MSE TSB offer. Sure, it will have an effect on my score, which has already been affected by using the MSE big energy switch last year. You shouldn't get caught up on what your score is but what your report contains.

Do you want to know how stupid the credit score system is? Your credit card looks at how well you have been managing your credit and gives you a credit limit increase (they trust you more), but your credit score will go down. Have a lot of bad debts and increasingly struggling, and reluctantly decide to file for bankruptcy - your score will go up!!

shortcrust

After buying a new house and getting two new 0% credit cards and a new current account I now have wildly different scores on Noddle (638) and Clearscore (218!). All based on the same information. Shows how daft these scores are.

'Normal' financial behaviour is unlikely to have a significant impact on your ability to get credit. Switching banks definitely falls within the realms of normal behaviour. A search and a new account may make your 'score' dip for a couple of months but they're really really really not a big deal.

It worries me that people have bought so heavily into the whole score thing. We're forever reading of people doing or not doing things just for the sake of their score.

PixelPound

shortcrust wrote: »

After buying a new house and getting two new 0% credit cards and a new current account I now have wildly different scores on Noddle (638) and Clearscore (218!). All based on the same information. Shows how daft these scores are.

'Normal' financial behaviour is unlikely to have a significant impact on your ability to get credit. Switching banks definitely falls within the realms of normal behaviour. A search and a new account may make your 'score' dip for a couple of months but they're really really really not a big deal.

It worries me that people have bought so heavily into the whole score thing. We're forever reading of people doing or not doing things just for the sake of their score.

In addition to the OP's switching fear, you hear of people incurring interest on credit cards by intentionally opting to not clearing them when they could, or taking out loans they don't need to have the balance sit in an account, all in the vain hope of a credit score increase.

It's one thing been mindful of not doing activities to overly affect your score (e.g. applying for too many credit products in a short period), it's another to do something that will cost you money in the hope that because you have been charged money it will increase your score.

I wonder if whoever came up with the idea of having a score for the CRA's has been sufficiently rewarded as its surely one of the main reasons they make so much.

GingerBob_3

You've got to laugh. :rotfl:


The government is desperate for people to switch current accounts and can't understand why more people don't. They, the government, are institutionally thick. Apart from it being complicated (don't believe the lies that it isn't), that fact that your ability to obtain credit may be affected, also militates against it. I wonder if they'll ever realise this - and perhaps do something about it? No, I don't suppose they will.