Overdrafts and your credit score

When we decide who’s eligible for an overdraft and how big it should be, we take into account internal data as well as information from our credit reference agencies. TransUnion and Experian are the two credit reference agencies we work with.

Here’s what you need to know about how this can impact your credit score.

Checking your eligibility leaves a ‘soft footprint’ on your credit report but doesn’t impact your score

To see if we can offer you an overdraft, we need to look at your credit history. This is known as a ‘soft search’ and will show up on your credit report as a ‘quotation search’ and ‘administration review’. Lenders can’t see this information, so it won’t affect your chances of getting credit.

If you switch on an overdraft, we tell our credit reference agencies – which might affect your score

This is known as a ‘credit application search’ and it creates a ‘hard footprint’ on your credit file which can affect your credit score. Each credit reference agency has their own way of calculating credit scores, so how this affects your score depends on that particular agency’s scoring model.

How you use your overdraft can also affect your credit score

For example, if you’re in your overdraft for more than 3 months without putting any money into your account, this can negatively affect your score. Again, the impact this has depends on how a particular credit reference agency calculates your score.