Will opening a second current account harm my credit score?

qwerteabag

I’ve been contemplating opening a second current account with Barclays to take advantage of their 5%+ linked savings account, as well as to eventually take advantage of switching bonuses. However, I’ve read conflicting information about how opening accounts can affect your credit rating. 

Just for context, I am…

- In my mid-20s
- Taking home £1400-2000/m in my zero-hours NHS role
- Fortunately living at home for free 
- Have £15,000 in cash and increasing (mostly held in the 2.75% Santander account)
- Contribute 25% of my income to stocks (currently down huge, but happy to contribute and hold for 30 years) 
- Perfect credit score (999/999) from 8 years of responsible 0% credit card spending (it’s my only one and essentially replaced my debit card, gets paid monthly in full and never goes beyond 30% utilisation)
- Current debt of £1,500 (bought an iPhone financed at 0% for 24m). 

Therefore I’m VERY keen to not harm my score! My plan was to open the relevant Barclays account to get access to the savings account, max the savings limit out and leave the rest with Santander. Then if things change I’ll just move to the best offer or go for the switching bonuses. 

Can someone clarify if opening a second account and potentially switching it multiple times over the next 1-3 years is a bad idea for my score? Earnings are low and inflation is high, but it’s not worth sacrificing the score over!

MorningcoffeeIV

Yes, it will harm your score, but that's fine. Your score isn't seen or used by lenders. It's purely for entertainment. 

So if you need a new current account, go for it. It's not going to impact your credit-worthiness.

sourcrates

I would say you are seriously overthinking this issue, an issue that really does not exist.

You don`t have a credit score, other than the rubbish the CRA`s try to peddle.

If you want to swap current accounts, then do so, if you want to claim further switching bonus offers in the future, again, do so, don`t pay any heed to a number no one see`s but you, and is never used in lending decisions.

Don`t become obsessed with things that don`t matter.

qwerteabag

MorningcoffeeIV said:

Yes, it will harm your score, but that's fine. Your score isn't seen or used by lenders. It's purely for entertainment. 

No way! I had no idea! So what’s the criteria that lenders use, and how would I know how I compare? Also been thinking of taking out a rewards credit card of some description to replace my existing one 🤔

MovingForwards

Credit history eg things paid on time and the right amount paid. Being on the electoral roll. Stable address history eg not moving every few months. Having some form of income. 

Bad is having late / missed payments, borrowing up to your eyeballs and making minimum payments (unless on a promotional rate), having arrangement to pay / default markers, being in an IVA or debt management plan or ever having one, same with bankruptcy or DROs.

Time heals blips on credit reports if financial difficulties happen, some lenders are more forgiving than others.

Edi81

qwerteabag said:

MorningcoffeeIV said:

Yes, it will harm your score, but that's fine. Your score isn't seen or used by lenders. It's purely for entertainment. 

No way! I had no idea! So what’s the criteria that lenders use, and how would I know how I compare? Also been thinking of taking out a rewards credit card of some description to replace my existing one 🤔

The lenders have their own scoring models that they spend millions of pounds on. 

I quick search on the forum would tell you that the scores you can buy or see are made up. 

[Deleted User]

According to Credit Karma my score is 593 / 710, ClearScore says 769/1000 down a few points - mostly because I keep opening current accounts for switch bonuses so ironically me becoming better off means I am more of a credit risk apparently, scores are utter nonsense, ignore them

I opened 2 accounts - Monzo and Starling and have done 3 switches - one to Nationwide then soon after to Lloyds and the other to Santander (pending payment), I'd rather have the £450 than worry about the gimmick score

MrFrugalFever

just to back up what the above have said, specifically farfetch, I have a discharged Iva on my public record section of all 3 CRA’s with 11 months remaining before they drop off completely (6 year rule).
my credit karma score is 559 and my Clearscore score is 755…..

they really are made up.

[Deleted User]

And therein belies the myth of scores having meaning. I have 3 BT cards with 0% offers, running mostly to 2024, all paid well over the minimum every month to clear down before any interest is paid, my other 2 main cards are paid in full every month, I have no overdraft even available, no loans, never had debt issues or IVA or anything like that and my scores are marginally better than someone with an IVA in the past. By any logic I should be light years ahead in scoring yet I suspect I would have potentially much more chance of getting a card or finance product, certainly I have never been refused a BT card that I have applied for, got a car on 0% PCP that was paid off in full about 5 years ago etc

phillw

qwerteabag said:
No way! I had no idea! So what’s the criteria that lenders use, and how would I know how I compare? Also been thinking of taking out a rewards credit card of some description to replace my existing one 🤔

In general they look at similar criteria to what the CRA do when calculating their credit score.

Each lender has different levels of risk they are happy with depending on the prevailing financial conditions, as their objective is to make as much money as possible. So they will weight things differently.

The credit score isn't for entertainment, that is just hyperbole. For better or worse it's supposed to give a rough idea how your credit file will look to a hypothetical average lender. If it plummets to zero without you knowingly doing anything, then it's worth investigating. If it drops 100 points when you open an account then that is kinda normal.

I have 14 current accounts, most with small overdrafts (only accounts with overdrafts should appear on your credit file). I managed to get a 0% credit card recently, so it's not that big a deal. MSE says my score is in the 700 range, one of the reason given is that I've applied for a load of credit in the last six months.

My rule of thumb has always been to avoid applying for three lines of credit in a couple of months. Especially if one of them is a mortgage. However I've had 5 in the last three months & I haven't been turned down for credit, though they have been relatively low values.

[Deleted User]

phillw said:

qwerteabag said:
No way! I had no idea! So what’s the criteria that lenders use, and how would I know how I compare? Also been thinking of taking out a rewards credit card of some description to replace my existing one 🤔

In general they look at similar criteria to what the CRA do when calculating their credit score.

Each lender has different levels of risk they are happy with depending on the prevailing financial conditions, as their objective is to make as much money as possible. So they will weight things differently.

The credit score isn't for entertainment, that is just hyperbole. For better or worse it's supposed to give a rough idea how your credit file will look to a hypothetical average lender. If it plummets to zero without you knowingly doing anything, then it's worth investigating. If it drops 100 points when you open an account then that is kinda normal.

I have 14 current accounts, most with small overdrafts (only accounts with overdrafts should appear on your credit file). I managed to get a 0% credit card recently, so it's not that big a deal. MSE says my score is in the 700 range, one of the reason given is that I've applied for a load of credit in the last six months.

My rule of thumb has always been to avoid applying for three lines of credit in a couple of months. Especially if one of them is a mortgage. However I've had 5 in the last three months & I haven't been turned down for credit, though they have been relatively low values.

The credit "score" is 100% entertainment, it's a gimmick and is never used by lenders or even seen by them. It fluctuates a lot to tempt people to buy into the "improvement" services they offer. The only use for the free service is to look for anything that shouldn't be on there. Lenders do not have a one size fits all criteria for lending so what the CRAs think you are worth is moot as what one lender might say no to regardless of other factors e.g. a lender who will automatically reject anyone with a IVA/default or whatever, another lender might ignore completely. Thus a score of say 750 with a default might mean you don't get any credit you want, but someone with a score of 500 with a clear record can do.

My current accounts (no OD) appear on my credit reports