I am tracking my credit rating with Experian, CretiKarma and Clearscore. In the last 2 months it has gone down and the only change to it is that that I have opened two more bank accounts. My current banking(Halifax) that I have been using for 5 years and a new Natwest account (less than a 4 months old) and a new Monzo account(for traveling purposes also less than 4 months old). Does multiple bank accounts reduces your Credit rating.
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1CreditKarma and other services usually provide a way to show you exactly what has changed and what impact it had. Have you explored those tools? Or do you just use them to obtain your score?– dwizumFeb 12, 2020 at 18:08
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I have just used them to obtain my score– UncleDaveIsWatchingFeb 13, 2020 at 14:23
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You might want to explore their tools some more. When you log in to Credit Karma, it prompts you when your score has changed, and gives you an explanation of what changed on your report (related to that score change). For instance, you might get a prompt that basically says, "You just opened a new auto loan with bank such and such" or, "Your balance on this account went down by this amount." You can even set it up to email you an alert any time something changes. You'll get an email that says, "Did you just open this auto loan?"– dwizumFeb 13, 2020 at 14:31
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3 Answers
You asked,
Does multiple bank accounts reduces your Credit rating
The answer depends on the type of account. If it is a loan, it will show up on your credit report and will impact your score. A deposit account won't show up and won't impact your score.
There may be other, less obvious things happening with respect to your credit report, which may also be impacting your score. For instance, if an old, long-since-closed account has recently reached the age threshold at which it is no longer included in your score, you may see a change even though you didn't actually do anything different today to trigger it. There are many online resources that explain the factors that go in to credit scores in the general sense, but if you're already registered with a service like CreditKarma, you should be able to utilize that service to see the specific changes to your report on a monthly basis, which should tell you exactly what caused the change.
Presumably when you opened the bank accounts there would be hard inquiries run when the banks checked your history. Hard inquiries only have a small temporary negative effect on your score, and your score should go back up within about 6 months. If that doesn't explain the dip then perhaps something else changed about your credit profile; for example, credit line utilization percentage tends to slightly fluctuate month to month for most people.
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1Hard inquiries aren't typically incurred for bank accounts. Just lines of credit.– ceejayozFeb 12, 2020 at 22:41
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@ceejayoz some banks do and some don't. But given the assumption of no other changes to the profile (which I think OP is assuming), I'd guess at least one of these did. If you can view your own report it should indicate if inquiries were done, and by whom.– TTTFeb 13, 2020 at 14:29
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1I've never heard of a bank taking a hard pull for a deposit account. They often do soft pulls as a way to get a peek at your wallet, but a hard pull wouldn't make sense. But since we don't know what types of accounts the OP had recently opened, it's kind of a moot point.– dwizumFeb 13, 2020 at 14:33
In short, some credit referencing agencies think older accounts indicate stability (I think Experian mentions it), so may give you a lower score for a while if you open new current accounts.
But it is just a scoring they have decided. Lenders may ignore it entirely and you could argue that a "savings score" would be just as relevant.
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One of the things I noticed is that my current bank(Halifax) was giving(offering in the loan section of the online banking) me a 50k pre-approved loan on a low interest rate before January and since those 2 current accounts where added that offer was dropped. Feb 13, 2020 at 16:00