Does a Student Checking Account Affect Your Credit Score?

Opening a student checking account won’t strengthen or weaken your credit. Banks don’t report checking accounts to Equifax, Experian, or TransUnion. The two things that can follow you are an overdraft left unpaid long enough to go to collections and your record with ChexSystems, the report banks check before they let you open an account.

Does student checking affect your credit score?

The short answer is no. It’s a common misconception that your income and bank account balances influence your credit score. The point of the credit system is to gauge how reliably you can pay back money you’ve borrowed, not to see how much money you have.

That doesn’t make your checking account irrelevant. It’s usually where your other payments come from, like a credit card bill, a phone bill, or rent. And a clean banking record is what lets you keep a checking account open in the first place.

Many banks and credit unions also build money management tools into student accounts, like mobile banking, budgeting features, and credit score monitoring. Not every account has them, so compare a few before you pick one.

Read more >> How to Build Credit in College

How a checking account can affect your credit

Because a checking account isn’t a credit product, it won’t appear on your credit report. But there are two ways it could affect your credit indirectly.

Overdrafts sent to collections

If you overdraw your account and bring it back to a positive balance, the overdraft won’t go to collections. The risk comes if you leave the negative balance unpaid. Eventually, the bank can send the debt to collections, and a collection account can do real damage to your credit.

A collection account generally stays on your credit report for seven years. Paying it off helps more than it used to. Some FICO and VantageScore models ignore paid collections, though many lenders still use older versions.

ChexSystems vs. credit bureaus

Credit bureaus don’t track your bank accounts, but ChexSystems does. It’s a reporting company like the credit bureaus, but instead of your borrowing, it tracks your banking history.

Banks and credit unions use these reports to decide whether to offer you a checking account. It may be harder to get approved if your report includes negative items like these:

• Unpaid overdrafts
• Bounced checks
• Involuntary account closure
• Suspected identity theft or fraud
• Applying for several bank accounts in a short time

Negative information generally comes off a ChexSystems report after five years. You don’t have to wait to see what’s on yours. You can request one free ChexSystems report a year. If something is wrong, dispute it in writing, and ChexSystems has to investigate, according to the CFPB.

Bottom line

A student checking account won’t touch your credit score unless an overdraft goes unpaid long enough to land in collections. The flip side: it won’t help your score either. Your bank sees every bill you pay on time, but it doesn’t report any of that to the credit bureaus.

A Kikoff Credit Account does. It reports your on-time payments to Equifax, Experian, and TransUnion, with no credit check to sign up. Plans start at $5 a month.