What Is a Deposit Account Score and How Is It Calculated?
Understand your deposit account score: learn how banks assess your checking and savings history and how to manage it.
A deposit account score is a specialized risk assessment tool used by financial institutions to evaluate potential customers. This score helps banks and credit unions determine the risk associated with opening new checking or savings accounts. It functions as a gatekeeper for banking services, similar to how a credit score influences lending decisions, but focuses exclusively on banking history.
What is a Deposit Account Score?
A deposit account score is a numerical evaluation of an individual’s past banking activities. Its primary purpose for financial institutions is to assess the likelihood of problematic behaviors, such as account fraud, frequent overdrafts, or other financial mismanagement issues. This assessment occurs before a new account is opened.
These scores and reports are compiled and maintained by specialized consumer reporting agencies. Two prominent entities are ChexSystems and Early Warning Services (EWS). These agencies collect and aggregate data on individuals’ deposit account histories reported by financial institutions. They provide financial institutions with a consolidated view of an applicant’s banking behavior, aiding in their decision-making.
Key Factors in Score Calculation
A deposit account score is based on a consumer’s historical interactions with deposit accounts, distinguishing it from credit scores which focus on borrowing. Various banking activities can significantly influence this score, with certain behaviors leading to a negative impact. For instance, frequent overdrafts can lower a score.
Similarly, transactions marked as non-sufficient funds (NSF) are also detrimental. Account closures initiated by a financial institution due to negative balances, suspected fraudulent activity, or unaddressed unpaid bank fees can severely impair a deposit account score. Conversely, maintaining accounts in good standing, consistently avoiding negative incidents, and demonstrating responsible financial management contribute positively to this score.
Accessing and Reviewing Your Report
Consumers have a right to obtain a free copy of their deposit account report from each major reporting agency once every 12 months. To request these reports, consumers can visit the official websites of agencies like ChexSystems or Early Warning Services, or contact them via phone or mail.
Upon receiving the report, carefully examine its contents for accuracy. These reports detail various aspects of an individual’s banking past, including account opening and closure dates, reported overdrafts, instances of non-sufficient funds activity, and any reported fraudulent actions.
Managing Your Deposit Account Score
If you discover any inaccuracies on your deposit account report, initiate a dispute with the reporting agency. This process involves contacting the agency, such as ChexSystems or Early Warning Services, and providing supporting documentation to substantiate your claim. The agency is obligated to investigate the disputed information within 30 to 45 days and correct any errors found.
Beyond addressing inaccuracies, maintaining a healthy deposit account score involves consistent responsible banking practices. Avoiding overdrafts and non-sufficient funds transactions is a primary step to prevent negative entries. Promptly address any outstanding bank fees and ensure accounts remain in good standing by maintaining positive balances. Utilizing online banking tools to regularly monitor account activity can help identify and resolve potential issues before they negatively impact your banking history.