Credit Score lowered by opening Current Account?

NBML

Hi All,

I've done some research online and seen some conflicting reports about how opening a new current account with a bank will and won't impact your credit rating. However, I've not seen a definitive answer as to why it would lower your credit score.

Now, I understand if a hard check on your credit report is conducted, then that will likely lower your score. But if only a soft check is conducted, then lenders can't see that

Example: I opened a new current account (not a switch, new account) with Barclays recently just to open a HTB ISA, and my credit score has gone down. I did not apply for an overdraft, and I can see from my credit report that I've had no hard enquiries on my account over the past 12 months. Barclays only pulled a soft check. However, in the section that shows me 'changes this month' it shows a new current account being opened.

I get my score through ClearScore at the moment, so I don't know if it's just their algorithm, but it goes back to my original question. Why has opening a new current account with a soft check on my account impacted my credit score by 60 points? How does opening a new account (with no credit attached to it) affect my credit worthiness? There have been no other changes to my credit report, and my score has been stable for some time. The only change I'm aware of, and from what I can see, is this.

Whilst I know the score will, in time, come back up, I just don't see how a new current account correlates with a lower score.

I have been wanting to move my main banking activities to Monzo for everyday use and keep my Barclays account just for the HTB, mainly because it had the highest percentage. But it puts me off opening an account with Monzo if my credit score is going to take another dip, despite them confirming they too would only do a soft check.

Anyone shed any light on it?

[Deleted User]

It's because scores go down with change. Any change generally, good or bad.

It's nothing to worry about as it's just a gimmick that only you see and no one else will ever care about it.

NBML

Deleted_User wrote: »

It's because scores go down with change. Any change generally, good or bad.

It's nothing to worry about as it's just a gimmick that only you see and no one else will ever care about it.

Thanks. I've just come across the article in one of the stickied threads about Credit Scores as well, which I've had a read of. It seems I misunderstood that lenders would be able to see your actual score. So to a lender, they won't be able to see if I have 1 or 10 bank accounts, as long as none of them do a hard search on me. So in this respect, this score doesn't actually mean anything.

[Deleted User]

They will see all your accounts if they do a hard search yes.

They just never see the make believe score or ratings.

gionnetto

NBML wrote: »

I opened a new current account (not a switch, new account) with Barclays recently just to open a HTB ISA, and my credit score has gone down. I did not apply for an overdraft, and I can see from my credit report that I've had no hard enquiries on my account over the past 12 months. Barclays only pulled a soft check. However, in the section that shows me 'changes this month' it shows a new current account being opened.

Because it lowers the average age of your accounts, which is a factor in how your credit score is calculated.

[Deleted User]

gionnetto wrote: »

Because it lowers the average age of your accounts, which is a factor in how your credit score is calculated.

Or you could just close your eyes and imagine a higher number.

That would have about the same effectiveness as the CRA scores

PRAISETHESUN

As above - ignore any reference to your "score" or "rating" as these particular numbers are not seen by lenders. They are also not a measure of creditworthiness in any sense - best to ignore them. What you want to do instead is to focus on maintaining solid credit HISTORY.

There are many factors that lenders take into account when assessing an application, and every lender has different criteria. Multiple hard searches, resulting from multiple applications will be seen by lenders and can temporarily reduce your ability to get credit. I would advise that yo check your reports from all 3 CRAs as you will almost definitely have a record of a current account application on at least one if you have applied for one recently (not every lender reports to every CRA so if you check the wrong report you wont see anything). Additionally, some lenders take into account the age of your accounts so multiple newer accounts can lower the average age of your accounts (older accounts indicate stability, which is seen positively) and reduce your ability to get credit.