Multiple Checking Accounts and Your FICO Score

Since their popularity took off in Amsterdam in the 16th century, checking accounts have been a convenient and wonderful tool to help consumers buy goods and services, or to pay off other debt. By using electronic transfers, paper checks, and your debit card to pay your way, there is no need to have to carry large amounts of cash. Everyone should have at least one checking account to their name and in some cases multiple accounts are perfectly fine. However, to ensure that all your checking accounts have no negative impact on your ability to get loans, you must take proactive measures to ensure that you manage your checking accounts accordingly.

How Your Financial Health is Determined

There are several systems in place that creditors use to gauge the financial health and consequential risk of their potential client base. Those who mismanage their checking account by overdrawing, not paying back the debt to the bank, and then having their accounts closed by the issuing financial institution will be “reported” on the Chex System. The Chex System is used by financial institutions as a safety precaution to determine whether or not to let an individual open a transactional account through them.

For those who apply for any type of loan, such as a credit card, mortgage, or auto loan, their FICO score is the main barometer of their financial health. The higher the rating on your FICO credit score, the better and the lower the interest rates you will be charged when you are granted credit from the issuing financial institution.

The systems are completely different and view unique behaviors when generating a report on an individual. Although having multiple checking accounts either managed properly or abused, does not have a direct affect on your FICO score. Similarly, checking account behavior does not affect PLUS score ratings, an alternative to FICO credit scores.  However, it can prevent you from having success in securing lines of credit. If you bounce your checks frequently, that behavior does not directly affect your credit score, but underwriters may weigh your history of money mismanagement and may prevent you from getting the credit line you want.

If you are having trouble managing multiple accounts then you should just have one checking account and direct all your finances into that checking account so that you can make your finances more managable.