Having multiple bank accounts is very common in the UK. In fact, studies show that most Brits have at least three bank accounts. Having more than one account can be helpful in many ways, but many people worry about how it will affect their credit score. So, does having more than one bank account in the UK hurt your credit?
The short answer is no, having multiple bank accounts does not directly hurt your credit score in the UK. The three main credit agencies – Experian Equifax and TransUnion – do not take into account the number of bank accounts you have when calculating your score.
However, opening too many accounts in a short amount of time could hurt your credit score in some indirect ways. Let’s take a closer look:
How Your Credit Score is Calculated in the UK
Your credit score is a number between 0 and 700 that lenders use to evaluate your creditworthiness. The higher your score, the more likely you are to be approved for credit products like loans and credit cards.
The main factors that influence your credit score are
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Payment history – Have you consistently paid your bills and debts on time? Late or missed payments can significantly lower your score
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Outstanding debt – How much of your available credit are you currently using? Maxing out cards or loans can hurt your rating.
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Length of credit history—In general, if you take care of your credit and have a longer history, that will help your score.
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New credit applications—Too many “hard searches” from new credit applications in a short amount of time can be a red flag.
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Credit mix – Having different types of credit (mortgage, credit card, personal loan, etc) demonstrates responsible use.
As you can see, the number of bank accounts you have is not directly considered.
When Multiple Accounts Could Indirectly Affect Your Credit
While having multiple accounts in itself won’t hurt your credit, here are a couple scenarios where it could have an indirect negative impact:
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Opening too many new accounts in a short period: If you open several new bank accounts within a few months, this can look suspicious to lenders and may hurt your score. Try to space out new applications by at least 6 months.
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Applying for multiple overdrafts: Some banks offer overdrafts when you open a new account. Having several overdraft facilities could tempt you to take on more debt than you can handle, leading to missed or late payments that damage your credit rating.
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Not keeping track of balances and fees: With more accounts, it can be easy to lose track of your overall finances, miss payments, accumulate fees and overspend – all of which will worsen your credit score if left unchecked.
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Forgetting to close unused accounts: Having multiple dormant bank accounts you never use could make you appear overextended to lenders when they review your report. Close unused accounts.
Tips for Managing Multiple Accounts Without Hurting Your Credit
If you want the benefits of having more than one account without risking your credit score, here are some tips:
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Space out applications by at least 6 months – This shows you are not desperately opening accounts.
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Try not to open too many at once – Start with 2 or 3 accounts and see if you can manage them well first.
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Avoid applying for excessive overdrafts – Only ask for what you reasonably need and will use responsibly.
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Consolidate balances if you have large debts – Move to lower interest accounts to manage debts in one place.
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Use budgeting tools to track all accounts – Apps and spreadsheets can help you stay organized.
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Set up account alerts – Get notifications for low balances or suspicious activity so you can address issues quickly.
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Check your credit report regularly – Make sure nothing negative appears that you’re unaware of.
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Close unused accounts – Don’t keep dormant accounts open forever. Close them.
As long as you avoid opening too many new accounts at once, don’t take on excessive debt, and stay on top of your finances, having multiple bank accounts should not negatively affect your credit score in the UK. With some diligence, you can enjoy the benefits of multiple accounts without harming your rating.
Better money management
Generally, having multiple bank accounts allows you to allocate your money more effectively and track your spending more accurately. You can use different accounts for different purposes such as bills, savings, and spending. You can work out what these different accounts should be for with the budgeting rules mentioned above
Using different bank accounts keeps your day to day spending separate from your other financial obligations and goals. This means that direct debits for your bills arenât eaten into by your spending on luxury items or nights out – or the other way round. Also, consider opening a joint account with your partner if youâre sharing bills, etc.Â
5 advantages of having multiple bank accounts
If youâre wondering: âWhat happens if you have multiple bank accounts?â Loqbox has made a list of benefits of having multiple bank accounts – and some disadvantages – so you can decide if itâs the right thing for you.Â
Does Having Multiple Savings Accounts Hurt Your Credit | Savings Accounts with Chris Miles
FAQ
Is it bad for your credit to have multiple bank accounts?
Is there a downside to having multiple bank accounts?
Yes, having more than one bank account can be bad, mostly because it can make things more complicated and lead to higher fees. Specifically, keeping track of balances, transactions, and account requirements becomes more challenging with more accounts.
Does having too many checking accounts hurt your credit?
In general, bank accounts don’t affect your credit score, and they don’t show up on your credit report.
Is 5 bank accounts too much?
When it comes to how many bank accounts you should have, the answer is, as many as you want. Ideally, you should have two to three savings accounts and one to three checking accounts. This is enough that you can manage your savings and expenses but not so many that it becomes unwieldy.