i am a part of 4 banks right now... one for a car loan, one for my normal bank, and 2 for mystery shops, and i recently applied for a credit card... i was turned down for several reasons... and one of them was opening up to many accounts in a short period of time...

jj-not sure where to post this but i think it will get the most attention here...

And the posters the think an overdraft will not hurt.....
bank info goes directly to credit reports no matter what you think....

Cooldude you are so correct it DOES affect it.....
absolutely positively....

Time is the only solution...... time does make it better :-)

Generally you get 5 'hits' to your credit report in a year before your score starts to suffer. That 'hit' may be applying for a loan, a credit card, renting an apartment, getting cell phone service with a contract, changing car insurance, opening a bank account, etc. etc. That is why it is so important not to 'waste hits' with shops.

When doing a bank a while back I asked specifically if they would hit my credit report when I opened an account. They told me that they use an internal-to-banking system, and as long as I didn't get an ATM card, no credit check would be run. Another bank I asked told me that they did credit reports for checking accounts, but used the internal-to-banking system for savings accounts, so I opened a savings account that still allows me to do shops. They both were correct and when I next checked my credit report there were no 'hits' from either of them. It makes sense to ask.

Wow! That's awful! And of course the MSC/schedulers aren't going to tell you that...thanks for the heads up! That's definitely good to know.

CANADAMOMMY Wrote:
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> And the posters the think an overdraft will not
> hurt.....
> bank info goes directly to credit reports no
> matter what you think....
>
> Cooldude you are so correct it DOES affect
> it.....
> absolutely positively....
>
> Time is the only solution...... time does make it
> better :-)

It is up to every person to understand and ASK what affects your credit score before you make a decision in your personal or professional life. But it is totally incorrect and inflamatory to say "bank info goes directly to credit reports" - that is just not how it works.

Here are the FACTS.

When you open an account at a bank - be it a credit card, a checking account, etc. or you apply for a loan The bank will probably check your credit. It is totally up to the bank and is not automatic. When applying for a loan, they will probably check your credit (but they might not, if you have a long standing relationship with the institution they may have pulled a soft credit check and pre-approved you for a loan without your knowledge and without the credit reporting agencies knowledge).

If they DO check your credit, it may be a soft hit or a hard hit. If it is a hard hit, then it will be listed on your credit report as an inquiry (not a trade line). This COULD affect you the next time you go to apply for a banking product. It will depend on other factors - your loan to asset ratio, your total revolving credit balance, your income, total number of tradelines and your payment history. Certainly opening many accounts in a short period of time could cause you to be denied - and the OP point is a good one.

Overdrafts - when there is a courtesy pay set up by the bank overdrafts do NOT get reported to the credit agency as long as the account is brought up to positive within 30 days. I understand that you "saw someone with an overdraft on a credit report." There are MANY reasons for this - perhaps the person was kiting checks, or they bounced a check and it was returned for insufficient funds, or they overdrafted and it remained in the negative for 31+ days, or the account was not set up with overdraft protection - all of these would be reasons why this could appear on a credit report.

My point is - simply saying that anyone that does a courtesy pay/overdraft shop is going to have it reported on their credit report is WRONG.

Look - I could care less if people want to do these shops - overdraft or opening accounts. I totally understand why people would want to NOT do them - be it the humiliation, the hassle of explaining why the account is overdrafted to their spouse, the amount of work it takes for the pay - whatever. But I feel compelled to correct the mis-information.

Edited 2 time(s). Last edit at 10/13/2010 12:39AM by MickeyB.

I am not sure if every bank reports to the credit bureau. I had my identity stolen several years back and I had checks bouncing everywhere because someone cleaned out my account. This was back in the day when there was not much protection for ID theft or help afterward (still not adequate). The bank returned to me all money and fees with the exception of two transactions that they claimed I authorized. They wanted me to pay the overdraft fees for those and I refused. Only an idiot would believe that I authorized transactions in Texas when I live in MN. Yeah I know I am stubborn but standing my ground was more important to me than opening a new account somewhere. None of this got reported to the credit bureau, however there is some system banks use to monitor a person's bank activity. I could not open new accounts for a long time.

Yes you are correct bobdev, there is a system - Chex Systems - that many financial institutions use for information on how you use your DDA accounts. This would reflect things like number of overdrafts and the like, as well as NSFs, etc. Only banks/credit unions have access to it and it is totally seperate from a credit report. It also is not used when applying for loans - only when opening new checking accounts or DDA accounts.

MickeyB, would that system be likely to show the small overdrafts required by a program such as this that are being resolved quickly?

Yes, if the FI (financial institution) participates in Chex Systems, then it would show. Also keep in mind that if you overdraft, this fact will print on your checking account statement each month for a year that you had an overdraft. This is another reg and something that might be an issue for the potential shopper if you share accounts/or it is a spouse issue.

Also - please keep in mind that Chex Systems is ONLY used by other banks/credit unions when opening a new deposit account (usually a checking account). It is not used in lending and it is not available or shared with organizations such as utility companies, apartments or other rental agencies, etc. You also can not order a copy of your "Chex Systems" report and it is not in any way a credit report nor is it ever used in lending decisions.

That said, having an overdraft on a DDA, where you paid the fee and brought it back to would actually cause you to be more desirable to a future institution where you might want to open a checking account. Overdraft fees are the number one biggest source of non-interest income to a bank. To give you an idea - at the institution that I worked at - we collected about 3.1 million in checking account fees every year. 2.5 million or so were overdraft fees. We could not have operated without a lot of customers using and paying courtesy pay fees. With the shrinking margins caused by the low interest rates, earning money in fees (instead of lending) is a direction that MANY financial institutions are headed - and courtesy pay fees is the number one way to do it. I would imagine that is why it is getting "shopped" because they want to make sure the process is operating correctly and that the people who are using it regularly - who are many times their best customers - are happy.

Yes, I'm aware that fees are becoming more and more prevalent. While it used to be that banks were offering free accounts for just about anybody who breathed, those are becoming harder to find and usually have direct deposit requirements now. That of course is pretty easily met by throwing a Paypal payment at them once or twice a month, but still . . .

Veering off course, but a PayPal deposit does not satisfy a bank's requirement of an ACH deposit. Some accounts require ACH credits, which are a different animal.

Interesting. I guess it depends on the bank. I kept BOA happily at bay on their 'direct deposit' requirement to keep the account free by setting up them as an alternate bank on PayPal and sending them a small deposit from time to time.

When they say too many accounts, they are referring to credit accounts. I actually cleaned up my credit and bought a house with the supplemental income from the work I do mysterys shopping. I have opened maybe 10 checking/savings account. They do not look up credit for these only credit card and loans.

Certainly for loans they are looking for how you have treated what credit you have received in the past and how much credit you have outstanding out there. I was amused a year or so ago when I was doing a shop and indicated I was thinking about closing a 30+ year old credit card because it was 'doing nothing for me' compared to the new cards that have reward points and cash back. The banker advised that I keep the account open and use it once or twice a year just to have that extended a history of good credit. It was an interesting conversation because I did have the sense he knew what he was talking about. He suggested that I not reduce any of my available credit limits on any of my cards because the system would show a reduction of available credit but not that it was consumer instigated. It seemed reasonable enough.

It may well be that where you have opened checking/savings accounts the banks have been using that internal system rather than checking your credit report. I was a little startled because I have no loans at all through my credit union. I opened a savings and checking account, and neither one is particularly active. When I opened the account I was under the impression they were not checking my credit report but using the internal system. It thus was a huge shock to me when on an auto loan inquiry shop the gal pulled me up on the system and said, "Your credit score is ____ so you would qualify for our best rate of ___." She was exactly correct on the score because I had purchased it within the previous month for a shop.

I have been opening and closing bank accounts for almost two years since I started mystery shopping.

I have good credit and am still offered and have had no problems during the two years getting any credit cards.

As far as I know, opening banking accounts does not effect your credit. However opening and closing credit cards does.

Flash Wrote:
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> Interesting. I guess it depends on the bank. I
> kept BOA happily at bay on their 'direct deposit'
> requirement to keep the account free by setting up
> them as an alternate bank on PayPal and sending
> them a small deposit from time to time.


I can't remember what bank it was, but that doesn't work for some bank I shopped a couple of weeks ago. I asked what counted as their required direct deposit and it had to be a regular type of payroll deposit.

Now, I have an account at another bank that, like your BOA account, accepts the Paypal deposit as their direct deposit.

There is a difference between a direct deposit and an ACH transaction, which some accounts require. The ACH is a direct debit to be regularly scheduled, then credited to an account specified. I haven't needed it for bank shops, only for personal use.

One bank I spoke with that wanted ACH was willing to accept an outgoing ACH, so they would have been willing to allow me to set up a recurrent billpay for that.