Will Opening a Business Bank Account Ding Your Credit?

Find out how banks use your credit score when you open a business bank account.

You’ve probably been told over and over that even applying for certain accounts―like store credit accounts―can hurt your credit score. So it’s only natural that you’re worried about the effect opening a business bank account can have on your credit.

The good news? In most cases, you can open a bank account without any affect on your credit score. Most banks don’t even look at your credit report. They do look at another report about you though―and it can make or break your application.

In this guide, we’ll explain how banks (don’t) use your credit score to make account decisions and tell you about the ChexSystems report they look at instead.

Does opening a bank account affect your credit?

We already said it, but it’s worth repeating: most of the time, opening a bank account (business or personal) has absolutely no effect on your credit score.

You see, your credit score gets used when you want, well, credit―like a loan, line of credit, or credit card. Your credit score and credit report gives lenders a look at your credit history, which helps them figure out if you’re likely to repay the credit they give you.

But a bank account (whether it’s a checking account or savings account) doesn’t give you any credit―just a place to put your money. So banks don’t really care about your credit history when you open a business bank account. It just doesn’t matter.

Bullhorn
Important exception

Your bank won’t check your credit when you open a deposit account (a checking account or savings account). But if you’re opening a new credit account (a credit card or line of credit), then you should expect a credit inquiry―and that could hurt your credit score.

Now, we do need to say that it is possible that a bank will look at your credit rating when you apply for a bank account. We’ve heard of it happening. (It’s just unlikely.) But even if one does, it shouldn’t hurt your credit.

That’s because your bank will probably opt for a “soft” credit inquiry rather than a hard pull. Soft credit checks don’t affect your credit score, so you can apply for a new checking account without worrying about a ding to your credit.

But again, for the most part, no one pays attention to your credit history when you open a bank account.

As we mentioned above, though your financial institution may look at a different report instead: your ChexSystems report. It includes details about your banking history (sort of like a credit report for bank activity).

We’ll talk about your ChexSystems report more in just a minute. But first, let’s answer some common questions about bank accounts and credit scores.

What credit score do you need to get a business bank account?

You don’t need a specific personal credit score to get a business checking account or savings account. Your bank probably won’t consider your credit score at all when you apply for a bank account.

Will opening a business bank account help your credit score?

Opening a bank account won’t help your credit score in most cases. Your account activity doesn’t get reported to credit bureaus because you’re not repaying any credit. In other words, your bank activity won’t factor into your credit score or credit report at all.

If you do want to help your credit score, there are plenty of other ways. For example, you can build credit with personal loans, business loans, credit cards, and many other credit products. (At least, as long as you repay your credit on time to establish a good payment history.)

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ChexSystems vs. credit checks

Alright, so we’ve mentioned your ChexSystems report a couple times now. But what is it?

As we briefly said, your ChexSystems report works kind of like a credit score, except for your banking history.

So rather than contain information about stuff like your payment history and number of credit cards, your ChexSystems report will have info about times you’ve bounced checks or overdrafted your account.

ChexSystems reports vs. credit reports

Factor
ChexSystems report
Credit reports
Used byBanksLenders
ContentBanking historyCredit history
Score range100–899300–850
History length5 yrs.7–10 yrs.

And yes, your ChexSystems report comes with a score, much like a credit score, that shows how account-worthy you are.

If you have a clean banking history, you’ll end up with a better ChexSystems score (closer to 899). But if you’ve collected overdraft fee after overdraft fee, you’ll probably have a lower score (closer to 100).

Either way, your bank will probably use your score to decide whether or not you get an account.

So if you’re planning on switching bank accounts soon, you may want to check your ChexSystems report to make sure there are no surprises. For information on how to do that, check out our guide to ChexSystems for business accounts.

What if you have a negative ChexSystems report?

If you’ve got a poor ChexSystems report, you may have a harder time getting a new account. You won’t be able to get a new checking account from just any bank.

But it’s not all bad news.

Some banks offer second-chance accounts, designed for people with poor bank account histories. Most of these are personal accounts―not business accounts―but they can help you improve your ChexSystems report so you can get approved for a business bank account in the future. (Because yes, you probably need a business bank account.)

You can also look for banks that don’t check ChexSystems. Most of the big banks do, so we suggest looking for a local financial institution (a bank or credit union) and asking about its account requirements.

Once you get your new account, make sure you take care of it. You know, don’t bounce checks, sign up for overdraft protection―stuff like that. That way, you can improve your ChexSystems report and score.

Because while banks may not care about your personal credit score, they do care about your bank history.

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The takeaway

So does opening a bank account affect your credit?

Not really. In fact, it doesn’t really matter if you have bad credit or good credit, because your bank won’t do a credit check. And that means that opening a business bank account won’t hurt (or help) your personal credit score. Put simply, there’s no need to worry about your credit history (in this case).

Instead, think about your banking history. Banks will look at your ChexSystems report and score to see if you should get an account.

So try to keep a clean banking history. And of course, a good credit history will help you in many other ways (like getting financing)―just not when it comes to your business bank account.

Ready to move forward with opening a business bank account? Find the right account on our list of the best banks for small business.

Disclaimer

At Business.org, our research is meant to offer general product and service recommendations. We don't guarantee that our suggestions will work best for each individual or business, so consider your unique needs when choosing products and services.

Chloe Goodshore
Written by
Chloe Goodshore
Chloe covers business financing and loans for Business.org. She has worked with many small businesses over the past 10 years, from video game stores to law firms. Those years watching frustrated business owners try to sift through their many options gave her a passion for breaking down complex business topics. She wants to help business owners spend less time agonizing over their businesses so they can spend more time running them.
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