Does withdrawing money affect credit score?

Does Withdrawing Money Affect Credit Score?

The answer to this common question is a resounding no. Withdrawing money, whether it’s from an ATM using your debit card or cashing a check at a bank teller, has no impact on your credit score.

Why Doesn’t Withdrawing Money Affect Credit Score?

Credit scores are calculated based on specific factors, including your credit history, payment history, credit utilization ratio, and credit inquiries. Withdrawing money from your bank account, on the other hand, is not a credit-related activity. It does not involve borrowing funds, making payments, or incurring debt. Therefore, it doesn’t affect your credit report or credit score.

Debit Card Withdrawals vs. Credit Card Withdrawals

It’s important to note that the same rules do not apply to credit card withdrawals. When you withdraw cash using a credit card, it’s considered a cash advance, which is a type of loan. Cash advances are reported to credit bureaus and can impact your credit score, especially if they’re made frequently or for large amounts.

Other Factors that Affect Credit Score

While withdrawing money doesn’t affect your credit score, there are several other factors that can influence it, such as:

• Making on-time payments: Paying your bills and debts on time is crucial for building and maintaining a good credit score.
• Keeping credit utilization low: The amount of credit you’re using relative to your available credit limit is called your credit utilization ratio. A high ratio can negatively impact your score.
• Avoiding new credit inquiries: Applying for new credit too often can trigger multiple credit inquiries, which can lower your score temporarily.
• Keeping credit accounts open: Long-term and established credit accounts help improve your credit score. Avoid closing accounts unnecessarily.

Conclusion

Withdrawing money from your bank account does not affect your credit score. It’s a non-credit-related activity that’s not reported to credit bureaus. However, it’s essential to be aware of other factors that can impact your credit score, such as making payments on time, managing credit utilization, and avoiding excessive credit inquiries.