 TITLE: How Savings Can Impact Your Credit CONTENT: Can a Savings Account Affect Your Credit Score?\n-----------------------------------------------\nCredit scores are developed solely from the information that appears on a consumer credit report. That includes a detailed history of credit cards and loans, as well as bankruptcy filings and any unpaid accounts that are in collections. Your creditors and the courts furnish all that information to the credit reporting agencies—Experian, TransUnion and Equifax.\nSavings and checking accounts are not listed on credit reports because no borrowing or debt is involved. Applying for and opening a savings account won't generate any information that shows up on your credit report, and neither will the deposits and withdrawals you make. Since this information will always be absent from your credit reports, it is not calculated into your credit scores. When you apply for credit with the intention of taking on debt, however, it will trigger an inquiry that will appear on your credit reports and be included in a score. There are two types of inquiries:\n*   **Soft inquiries** are placed on your report when lenders review your credit to preapprove you for a loan or credit card (or when you pull your own credit reports). They are not factored into your credit scores.\n*   **Hard inquiries** appear when a creditor uses your credit report to make a decision after you've applied for credit products. They are calculated into your scores.\nIf you take on debt, money in a savings account can help make sure you make every monthly payment on time and avoid carrying too much debt, which are the two most important credit scoring factors.\n*   **Payment history**: If you don't have sufficient funds left in reserves to pay your loan and credit card bills on time, you will end up with delinquencies on your credit reports. Creditors typically notify the credit reporting agencies that you're behind once payments are 30 days past due. Since payment history is the most important credit scoring factor, late payments can have a serious negative impact.\n*   **Credit utilization rate**: The second-most important scoring factor, credit utilization measures your credit balances against your total credit limit. Not having enough money in savings to deal with unexpected costs can affect your credit if you end up charging up your credit cards to make up the difference. Having a credit card balance at or near the card's credit limit raises your credit utilization rate, and may cause your credit scores to decline as a result. END