Opening a bank account is a very easy job and to be honest it is very convenient as well to do so. This facility can help people not only store their hard-earned money but also keep track of their finances. So, any bank always follows thorough procedures and creates an account for any person who wishes to create an account. This might also mean that they will keep a check on a few details of the person which can include their ID proofs and other basic details.
Some banks may also check your eligibility to hold a Credit card since most of your details are affiliated with your document such as your Aadhaar Card and PAN Card. This much information can allow the bank to look into the applicant’s banking details which they needed to know. Not the major financial details though.
The credit score can only be checked in case the banks find the applicant fit for any of their credit cards but before checking any credit details they do take the applicant’s consent. But it is not a mandatory check, it just happens in case the history of the applicant is great so the bank offers them credit cards.
While opening a new account with a financial institution, you are also allowing them to look at a few of your information.
What happens when you open a bank account?
When you try to open an account with a bank, you will be asked what type of account you wish to open. The options are typically a salary account or a savings account. However, in any case, the bank does not look into your credit history or credit score.
When you are opening a bank account with a bank, they just ask you for basic details and necessary information such as age for legal consideration, type of account, ID proofs, etc. All these are necessary for the bank to identify the applicant. So that the application can move further.
In what cases will the bank look into your Credit Score?
When the bank finds your eligibility which is checked in bulk by the banks while keeping every applicant’s information private, they offer you to apply for a credit card. Once a user has given permission and shown their consent on applying for a credit card, then the bank is allowed to check the credit score of the user. This happens just to check the credit card, an applicant is eligible for.
It is called hard inquiry when the bank checks the credit score of an applicant, which can somehow make a vital impact on your credit score.
The times the bank can check your credit score is when you apply for any financial tool such as a credit card and if you are applying for any type of loan or financial aid from the bank. In short, any time you ask the bank for financial help be it a personal loan or any other type of loan as an individual, your credit history will get checked.
Why does the bank check your credit score?
The bank checks your credit score to determine your creditworthiness. This means that the bank will check whether or not you are eligible to be given an unsecured credit card that has bank money for use.
To put it bluntly, it is just to check whether in the past you have taken any loan and were able to repay it or not. It also does the risk assessment for the bank when the bank notices that you have been a responsible user and used the card in a good manner, you are given the credit card. It helps the bank determine whether they will have to bear any risk by providing you with a credit card or any loan or not. The bank checks whether or not you will be able to repay, and if you will be able to do so then how.
Bank does not check your Credit Score or Credit Report when you try to open an account with the bank. As the bank is not allowed to check the details on their own accord, they need to check the same with the account holder. The bank sure cannot do a hard inquiry but they can do a soft inquiry which will help the bank determine whether or not a user is eligible for a credit card.
There are other reasons why a bank might need to look into your financial records but they cannot do so without your concern when you have defaulted somehow, they can check the details. But all together if it’s a matter of opening a bank account, you don’t need to be worried about having your credit details exposed to the bank.