Does Switching Banks Affect Credit

Does Switching Banks Affect Credit Score

Switching banks is easier than ever in the UK thanks to the Current Account Switch Service (CASS), which moves your account, direct debits, and standing orders to your new bank automatically. Whether you're after better interest rates, lower fees, or improved customer service, changing your current account is often a smart financial decision. But if you're concerned about your credit rating, you might be wondering — does switching banks affect your credit score?

The short answer is: no, switching banks does not directly affect your credit score. However, certain actions linked to switching, like opening a new account or applying for an overdraft, can have a small impact. In this article, we’ll explain exactly what happens to your credit file when you switch banks, and how to manage the process without damaging your credit profile.

Does Switching Current Accounts Affect Your Credit Score

Simply switching your current account using CASS will not harm your credit score. The switch itself isn’t recorded as a credit event, and credit reference agencies do not view it negatively.

However, some banks may run a credit check when you open a new current account — particularly if the account comes with:

• An overdraft facility

• A packaged account with credit-linked benefits

• Access to future lending such as loans or credit cards

If this happens, it may involve a soft or hard search on your credit file.

Soft Search vs Hard Search: What’s the Difference

• A soft search (or soft check) is a background check that doesn’t affect your credit score and isn’t visible to other lenders.

• A hard search is a more detailed check that is recorded on your credit file and can cause a minor, temporary dip in your score.

Most banks use a soft check to verify your identity unless you're applying for credit as part of the account (like an overdraft). If you’re unsure what kind of check will be performed, ask the bank before completing your application.

How Overdrafts and New Accounts May Impact Your Credit Score

Although switching itself has no negative impact, other parts of the process can influence your credit score:

1. Applying for a new overdraft

If you request or are offered an overdraft, the bank will usually perform a hard credit check. This could cause a small dip in your score, particularly if you've applied for other credit recently.

2. New current account shows on your credit file

Once your new account is open, it may appear as a new financial account on your credit report. This is perfectly normal and isn’t viewed negatively, unless you open multiple accounts in a short space of time.

3. Closing old accounts

Some people worry that closing an old bank account could reduce their credit history. In the UK, bank accounts generally don’t contribute much to your credit score unless they include credit features (like an overdraft), so closing an old current account won’t have a major effect.

4. Unmanaged overdrafts

If you switch to a new bank and take on a new overdraft, how you manage it matters. Regularly maxing out your overdraft or missing payments can be reported to credit reference agencies and harm your score.

Real-World Example

Tina switched her current account from Barclays to Nationwide using the CASS scheme. She didn’t request an overdraft, so only a soft check was performed. Her credit score remained unchanged, and all her direct debits were moved automatically. She benefited from a cashback offer and better customer service — all with no impact on her credit file.

By contrast, James applied for a premium current account with a £1,500 overdraft at his new bank. A hard search was carried out, and the new overdraft facility was added to his credit report. His credit score dipped by 10 points temporarily but recovered after a few months of on-time payments and low usage.

Does Switching Banks Improve Your Credit Score

Not directly. Your credit score doesn’t improve just because you’ve changed banks. However, it can support better financial behaviour that does help your score over time. For example:

• Moving to a bank with better budgeting tools could help you manage money more effectively

• Avoiding overdraft fees could make it easier to stay within your limits

• A more competitive account might allow you to reduce reliance on credit

These indirect benefits can help you maintain a strong credit profile over time.

Tips for Switching Banks Without Hurting Your Credit Score

• Use the Current Account Switch Service to ensure a smooth, hassle-free move

• Avoid applying for an overdraft unless you really need it

• Ask whether a hard or soft search will be used before opening the account

• Limit other credit applications around the time of your switch

• Make sure all direct debits and standing orders transfer correctly to avoid missed payments

• Monitor your credit report after the switch to ensure the new account is recorded accurately

You can check your credit report for free using ClearScore (Equifax), Credit Karma (TransUnion), or Experian’s free account.

Final Thought

Switching banks does not harm your credit score — unless you apply for a credit facility like an overdraft or mismanage your new account. The process of switching itself is safe and simple, especially when done through the Current Account Switch Service.

If you’re switching for better rates, service or features, go ahead with confidence. Just be mindful of any credit applications involved in the process, and manage your new account responsibly to keep your credit score in top shape.