July 3, 2022

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Do Your Savings Affect Your Credit Score? – Motley Fool

Having a good credit score is important because it can open the door to affordable borrowing opportu.......

Having a good credit score is important because it can open the door to affordable borrowing opportunities. Say you need money in a pinch and want to apply for a personal loan. The higher your credit score is, the more likely you’ll be to not only get approved for that loan, but to get it at a reasonable interest rate. Similarly, you might see a new credit card offer hit your radar that you’d like to pursue. The stronger your credit score is, the more likely you’ll be to snag it.

The more consistent you are with paying your bills on time and not borrowing more than you can afford, the higher your credit score is likely to be. And building up a healthy savings account balance is certainly a smart financial move to make to support that. But will having a decent chunk of savings impact your credit score? Here’s what you need to know.

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An indirect effect

A number of factors go into calculating a credit score, but your savings account balance isn’t one of them. Instead, these factors include: