Does Opening a Savings Account Require a Credit Check?

Opening a savings account does not involve a traditional credit check, unlike applying for a loan or a credit card. Financial institutions do not examine your credit score or credit report from credit bureaus when you open a savings account. This article explains the types of verifications banks perform and the essential information required to open a new savings account.

Credit Checks and Deposit Accounts

Credit and deposit products differ within financial services. Credit products, such as mortgages, auto loans, or credit cards, involve borrowing money from a financial institution. Lenders assess creditworthiness by reviewing your credit report and score, which indicates your history of managing debt. This process helps them determine the likelihood of repayment.

In contrast, a savings account is a deposit product, where you deposit money to earn interest. Since you are not borrowing funds, your ability to repay debt is not a factor in the account opening decision. Banks do not perform a “hard” credit inquiry for a savings account, which could temporarily affect your credit score. A financial institution might conduct a “soft” inquiry to verify identity, but this check does not impact your credit score. The primary concern for banks with deposit accounts shifts from credit risk to verifying identity and managing potential financial misconduct.

Required Information for Account Opening

Financial institutions must collect specific personal information and documentation when opening a savings account. Federal regulations, including the Bank Secrecy Act and the USA PATRIOT Act, mandate “Know Your Customer” (KYC) and Anti-Money Laundering (AML) procedures. These regulations aim to prevent financial crimes, such as money laundering and terrorism financing, by ensuring banks know who their customers are.

You will need to provide a government-issued photo identification, such as a driver’s license or passport, to verify your identity. Your Social Security Number (SSN) or Individual Taxpayer Identification Number (ITIN) is also required for tax reporting, as interest earned on savings accounts is taxable income. Banks will also ask for your date of birth, current residential address, and contact information. An initial deposit, which can range from no minimum to around $25-$100, may be required to activate the account.

Banking History Verification

Banks perform a background check focused on your banking history. This involves specialized consumer reporting agencies, such as ChexSystems. These agencies collect information from financial institutions regarding past deposit account activity, similar to how credit bureaus track borrowing history.

Reports from these agencies contain details about previous account closures, including negative balances, unpaid fees, overdrafts, or suspected fraudulent activities. Banks utilize these reports to assess the risk of potential account abuse or fraud, rather than credit risk. A history of issues, such as multiple bounced checks or accounts closed by banks, may be reported and could influence a financial institution’s decision to approve a new savings account.