Have you considered getting a checking or savings account for the first time in a while? You may be surprised to see that there may be some more requirements than you’re used to in the past. The reason for this is to protect your identity and to ensure that you a trustworthy relationship with money. When it boils down to it, you may be trying to decide if having a checking account will actually improve or hurt your credit, especially when it comes to applying for a secured or unsecured loan.

Here are a few advantages and disadvantages to having a checking account:

Personal financial planning

Can Be Used for Future Loan Applications

One great advantage to opening up a checking account at your local banking institution is that you’re establishing a good financial relationship with that bank. This is extremely helpful if you ever want to take out any type of secure loan. Your chosen checking account, like Kasasa Checking, should serve as a strong bond with a bank, which serves as your go-to when it comes to filling out your initial loan application.

Instead of choosing an out-of-town bank or institution you’ve never worked with before, start with your hometown bank. Some great loan offers may include:

  • A credit card with lower rates than average cards
  • Easy loan terms for a new or used automobile
  • Special financing for first-time homebuyers
  • Re-mortgage and second mortgage incentives for customers
  • Rewards programs for checking account holders

Keeping your checking account balanced and active is the best way to maintain a good working relationship with your bank. But keep in mind if you don’t pay your bills on time or you have a high debt-to-income ratio, you still may not qualify for certain loans. You’ll need to meet specific criteria first.

Multiple Conveniences

There are several conveniences to simply having a checking account. One of the most commonly offered is having a debit/credit card that is fee-free. This may mean that you have to have a specific balance in your account at all times to avoid the monthly fee.

Some banks also have a free 24-hour overdraft protection policy for all accounts. This means if you have a transaction that goes through much earlier than you predicted you’re safe from overdraft fees as long as you deposit the funds within 24 hours. This is a great benefit to avoiding fees and having outstanding checks go into collection. Another convenience is online banking.

Most checking accounts have online banking access as well as a phone app that allows you to easily track transactions and make deposits remotely.

Outstanding Balances Can Damage Your Credit Score

Most checking accounts make it easy for you to track your spending and to oversee all of your transactions. But in some cases, when you aren’t able to make a deposit right away or you have multiple transactions running through at the same time, your outstanding overdrafts and checking account balance can quickly add up. This can leave you in the red and can take a lot of effort to resolve. Some banking institutions actually report outstanding balances that aren’t resolved right away to the national credit bureaus and ChexSystems. This can negatively affect you getting approved for an unsecured loan and prevent you from opening up new checking accounts.

Be sure if you have an outstanding balance with your bank or your checking account is negative that you resolve the issue immediately.

Checking account

Multiple Overdrafts Can Affect Your Buying Power

If you frequently use paper checks to pay for goods and services, you may realize that certain businesses scrutinize you if any of your checks have come back for insufficient funds in the past. Many businesses may not accept a paper check from you in the future if you’ve written bad checks in the past. This can greatly affect your overall buying power and spending at different businesses.

While many businesses do electronic checking transactions, some still accept paper checks and process them within a few business days. Keep in mind that even if the business does not run the check through electronically, the bank may once the check has been deposited and processed. This can expedite a transaction.

Be sure that you have enough money in your account to cover a check before you write it.


Having a checking account can be a great advantage in many ways. Use it responsibly and watch your credit rating improve as you move forward with future loan endeavors.