{"id":26964,"date":"2022-12-20T11:27:02","date_gmt":"2022-12-20T10:27:02","guid":{"rendered":"https:\/\/www.lendingstream.co.uk\/blog\/?p=26964"},"modified":"2022-12-20T11:43:13","modified_gmt":"2022-12-20T10:43:13","slug":"does-overdraft-affect-credit-score","status":"publish","type":"post","link":"https:\/\/www.lendingstream.co.uk\/blog\/does-overdraft-affect-credit-score\/","title":{"rendered":"Does an Overdraft Affect Your Credit Score?"},"content":{"rendered":"\n<p><strong>If you\u2019ve ever wondered how an overdraft affects your credit score, you\u2019re not alone. <\/strong>A lot of people don&#8217;t understand how this type of borrowing works and what it can do to their credit rating. It\u2019s important to understand how everything you do affects your credit score. Especially when you \u2018re trying to get your finances in order.<\/p>\n\n\n\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_82_2 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\n<label for=\"ez-toc-cssicon-toggle-item-69f2936a28043\" class=\"ez-toc-cssicon-toggle-label\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-69f2936a28043\"  aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/www.lendingstream.co.uk\/blog\/does-overdraft-affect-credit-score\/#what_is_an_overdraft\" >What is an Overdraft?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/www.lendingstream.co.uk\/blog\/does-overdraft-affect-credit-score\/#what_are_the_different_types_of_overdrafts\" >What are the Different Types of Overdrafts?<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/www.lendingstream.co.uk\/blog\/does-overdraft-affect-credit-score\/#1_authorised_overdraft\" >1. Authorised overdraft<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/www.lendingstream.co.uk\/blog\/does-overdraft-affect-credit-score\/#2_unauthorised_overdraft\" >2. Unauthorised overdraft<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/www.lendingstream.co.uk\/blog\/does-overdraft-affect-credit-score\/#will_i_be_charged_for_authorised_and_unauthorised_overdrafts\" >Will I be Charged for Authorised and Unauthorised Overdrafts?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/www.lendingstream.co.uk\/blog\/does-overdraft-affect-credit-score\/#does_an_overdraft_affect_your_credit_score\" >Does an Overdraft Affect Your Credit Score?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/www.lendingstream.co.uk\/blog\/does-overdraft-affect-credit-score\/#does_an_overdraft_appear_on_your_credit_report\" >Does an Overdraft Appear on Your Credit Report?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/www.lendingstream.co.uk\/blog\/does-overdraft-affect-credit-score\/#will_applying_for_an_overdraft_affect_your_credit_score\" >Will Applying for an Overdraft Affect Your Credit Score?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-9\" href=\"https:\/\/www.lendingstream.co.uk\/blog\/does-overdraft-affect-credit-score\/#is_it_bad_to_use_your_overdraft_every_month\" >Is it Bad to Use Your Overdraft Every Month?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-10\" href=\"https:\/\/www.lendingstream.co.uk\/blog\/does-overdraft-affect-credit-score\/#how_can_you_keep_your_overdraft_under_control\" >How Can You Keep Your Overdraft Under Control?<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-11\" href=\"https:\/\/www.lendingstream.co.uk\/blog\/does-overdraft-affect-credit-score\/#1_budget_your_money\" >1. Budget Your Money<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-12\" href=\"https:\/\/www.lendingstream.co.uk\/blog\/does-overdraft-affect-credit-score\/#2_download_your_banks_app_if_they_have_one\" >2. Download Your Bank\u2019s App (if they have one)<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-13\" href=\"https:\/\/www.lendingstream.co.uk\/blog\/does-overdraft-affect-credit-score\/#3_set_up_text_alerts_for_when_your_account_is_running_low\" >3. Set up Text Alerts for When Your Account is Running Low<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-14\" href=\"https:\/\/www.lendingstream.co.uk\/blog\/does-overdraft-affect-credit-score\/#will_overdrafts_stop_you_from_getting_loans\" >Will Overdrafts Stop You from Getting Loans?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-15\" href=\"https:\/\/www.lendingstream.co.uk\/blog\/does-overdraft-affect-credit-score\/#what_alternatives_are_there_to_having_an_overdraft\" >What Alternatives are there to Having an Overdraft?<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-16\" href=\"https:\/\/www.lendingstream.co.uk\/blog\/does-overdraft-affect-credit-score\/#1_credit_cards\" >1. Credit Cards<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-17\" href=\"https:\/\/www.lendingstream.co.uk\/blog\/does-overdraft-affect-credit-score\/#2_short_term_loans\" >2. Short Term Loans<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-18\" href=\"https:\/\/www.lendingstream.co.uk\/blog\/does-overdraft-affect-credit-score\/#can_i_switch_bank_accounts_if_ive_got_an_overdraft\" >Can I Switch Bank Accounts if I\u2019ve Got an Overdraft?<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-19\" href=\"https:\/\/www.lendingstream.co.uk\/blog\/does-overdraft-affect-credit-score\/#1_switching_bank_accounts_with_an_overdraft_youre_not_using\" >1. Switching Bank Accounts with an Overdraft You\u2019re Not Using<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-20\" href=\"https:\/\/www.lendingstream.co.uk\/blog\/does-overdraft-affect-credit-score\/#2_switching_bank_accounts_with_an_overdraft_youre_using\" >2. Switching Bank Accounts with an Overdraft You\u2019re Using<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-21\" href=\"https:\/\/www.lendingstream.co.uk\/blog\/does-overdraft-affect-credit-score\/#faqs\" >FAQs<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-22\" href=\"https:\/\/www.lendingstream.co.uk\/blog\/does-overdraft-affect-credit-score\/#can_the_bank_remove_your_overdraft\" >Can the Bank Remove Your Overdraft?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-23\" href=\"https:\/\/www.lendingstream.co.uk\/blog\/does-overdraft-affect-credit-score\/#can_a_student_overdraft_affect_your_credit_score\" >Can a Student Overdraft Affect Your Credit Score?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-24\" href=\"https:\/\/www.lendingstream.co.uk\/blog\/does-overdraft-affect-credit-score\/#does_applying_for_an_increase_in_your_overdraft_affect_your_credit_rating\" >Does Applying for an Increase in Your Overdraft Affect Your Credit Rating?<\/a><\/li><\/ul><\/li><\/ul><\/nav><\/div>\n<h2 class=\"wp-block-heading\" id=\"what-is-an-overdraft\"><span class=\"ez-toc-section\" id=\"what_is_an_overdraft\"><\/span><strong>What is an Overdraft?<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p><strong>An overdraft allows you to borrow money through your account by spending more money than you have in that account. <\/strong>For example, Let\u2019s say you\u2019ve only got \u00a3100 left in your bank account, and you pay a bill for \u00a3120 your account will be overdrawn by \u00a320. This means you\u2019ll be in debt to the bank by \u00a320.<\/p>\n\n\n\n<p><strong>If your bank has put a block on you spending more than what\u2019s in your account, you won\u2019t be able to go overdrawn<\/strong>. So, in our example, you\u2019d be short \u00a320 when it comes to paying that bill.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"what-are-the-different-types-of-overdrafts\"><span class=\"ez-toc-section\" id=\"what_are_the_different_types_of_overdrafts\"><\/span><strong>What are the Different Types of Overdrafts?<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>If you\u2019ve got a bank account, you\u2019ll know if you\u2019ve got the option to go overdrawn on your account. But there are two types of overdrafts you can have.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"1-authorised-overdraft\"><span class=\"ez-toc-section\" id=\"1_authorised_overdraft\"><\/span><strong>1. Authorised overdraft<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>This is when the bank agrees to you spending more than what you have in your bank account. When this is agreed, you\u2019ll be given a limit up to which you spend to.<\/p>\n\n\n\n<p><strong>You can ask for an overdraft, or the bank may just give you one<\/strong>. But the main point is that, with an authorised overdraft, it\u2019s agreed in advance of you using it.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"2-unauthorised-overdraft\"><span class=\"ez-toc-section\" id=\"2_unauthorised_overdraft\"><\/span><strong>2. Unauthorised overdraft<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>This is when you spend more than what\u2019s left in your bank account, but you haven\u2019t agreed it with the bank. This means you\u2019re spending money you don\u2019t have without the bank\u2019s permission.<\/p>\n\n\n\n<p>You might have an authorised overdraft in place, but you spend over the agreed limit. If this happens, the amount you spend over your limit is also classed as an unauthorised overdraft.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"will-i-be-charged-for-authorised-and-unauthorised-overdrafts\"><span class=\"ez-toc-section\" id=\"will_i_be_charged_for_authorised_and_unauthorised_overdrafts\"><\/span><strong>Will I be Charged for Authorised and Unauthorised Overdrafts?<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Yes, there will be charges for going overdrawn. It doesn\u2019t matter whether the overdraft is agreed or not, you\u2019ll still be charged. This is because an overdraft is a form of debt, so the bank will charge interest on what you borrow.<\/p>\n\n\n\n<p>In the past, banks would charge more for an unauthorised overdraft than they would for an authorised one. But since April 2020, they\u2019re no longer allowed to do this. They can now only charge a single interest rate on all their overdrafts.<\/p>\n\n\n\n<p><strong>The amount of interest you\u2019re charged can be anything from <a href=\"https:\/\/www.moneyhelper.org.uk\/en\/everyday-money\/types-of-credit\/overdrafts-explained\" target=\"_blank\" rel=\"noreferrer noopener\">19% to 40% or more<\/a><\/strong>. It\u2019s important that you find out what interest rate your bank is going to charge you for going overdrawn.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"does-an-overdraft-affect-your-credit-score\"><span class=\"ez-toc-section\" id=\"does_an_overdraft_affect_your_credit_score\"><\/span><strong>Does an Overdraft Affect Your Credit Score?<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>An overdraft can <a href=\"https:\/\/www.lendingstream.co.uk\/blog\/what-affects-your-credit-score\/\"><strong>affect your credit score<\/strong><\/a>. But it all depends on how you use it. <strong>Having an overdraft won\u2019t have any impact if you don\u2019t use it<\/strong>. But if you have got an overdraft and you use it, the table below shows you how it\u2019ll impact your credit score.<\/p>\n\n\n\n<figure class=\"wp-block-table\"><table><tbody><tr><td><strong>How you use your overdraft<\/strong><\/td><td><strong>How it affects your credit score<\/strong><\/td><\/tr><tr><td>You stay within your agreed overdraft limit and pay it back in line with the bank\u2019s terms.<\/td><td>This won\u2019t negatively affect your credit score. It could improve your score by showing you can manage your money.<\/td><\/tr><tr><td>You go over your agreed overdraft limit.<\/td><td>This can damage your credit score as it looks as if you\u2019re not managing your money.<\/td><\/tr><tr><td>You have an unauthorised overdraft.<\/td><td>This will damage your credit score as it shows you\u2019re struggling to keep control of your finances.<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"does-an-overdraft-appear-on-your-credit-report\"><span class=\"ez-toc-section\" id=\"does_an_overdraft_appear_on_your_credit_report\"><\/span><strong>Does an Overdraft Appear on Your Credit Report?<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Yes, if you have an active overdraft, it\u2019ll appear on your credit history. When lenders run a credit check, they\u2019ll be able to see the following information about your overdraft.<\/p>\n\n\n\n<ul class=\"wp-block-list\"><li>How much your overdraft limit is.<\/li><li>How much you go overdrawn by.<\/li><li>How often you use your overdraft.<\/li><li>How you manage it and pay back what you owe.<\/li><\/ul>\n\n\n\n<p><strong>If you have an overdraft but never use it, it may not show up on your credit file<\/strong>. It depends on your bank.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"will-applying-for-an-overdraft-affect-your-credit-score\"><span class=\"ez-toc-section\" id=\"will_applying_for_an_overdraft_affect_your_credit_score\"><\/span><strong>Will Applying for an Overdraft Affect Your Credit Score?<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Applying for an overdraft will influence your credit score depending on the credit check the lender does. It could be either a soft credit check or a hard credit check.<\/p>\n\n\n\n<ul class=\"wp-block-list\"><li><strong>A soft credit check<\/strong> <strong>is when the bank gets an overview of your credit file.<\/strong> They don\u2019t see the details of your credit history. But it helps them to decide whether to give you an overdraft.<\/li><li><strong>If a <a href=\"https:\/\/www.lendingstream.co.uk\/blog\/soft-credit-check\/\">soft credit check<\/a> is done, you\u2019ll see it on your own credit file, but no one else will.<\/strong> This means it won\u2019t affect your credit score.<\/li><li><strong>A hard credit check means the bank can see details of your credit history.<\/strong> A <a href=\"https:\/\/www.lendingstream.co.uk\/blog\/hard-credit-check\/\"><strong>hard credit check<\/strong><\/a> will leave a mark on your credit file that other lenders can see. And this will have a short term effect on your credit score.<\/li><li><strong>A hard credit check will remain on your credit file for up to 12 months.<\/strong> But the longer the time that passes since the hard check is done, the less impact it has on your credit score.<\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"is-it-bad-to-use-your-overdraft-every-month\"><span class=\"ez-toc-section\" id=\"is_it_bad_to_use_your_overdraft_every_month\"><\/span><strong>Is it Bad to Use Your Overdraft Every Month?<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>The answer to this depends on how you use your overdraft. It\u2019s important that you treat it like a line of credit and use it wisely. That way it won\u2019t be such a bad thing if you use it every month. Keeping within the following guidelines will help.<\/p>\n\n\n\n<ol class=\"wp-block-list\" type=\"1\"><li>Always pay off your overdraft in line with the bank\u2019s terms.<\/li><li>Try not to spend up to your agreed overdraft limit.<\/li><li>Don\u2019t go overdrawn if you haven\u2019t got an authorised overdraft agreed in advance.<\/li><\/ol>\n\n\n\n<p><strong>By following these points you\u2019ll help your credit rating rather than hurt it<\/strong>. It\u2019ll show lenders that you\u2019re in control of your spending.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"how-can-you-keep-your-overdraft-under-control\"><span class=\"ez-toc-section\" id=\"how_can_you_keep_your_overdraft_under_control\"><\/span><strong>How Can You Keep Your Overdraft Under Control?<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>There are things you can do to keep your overdraft under control. Here are three top tips for you to follow.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"1-budget-your-money\"><span class=\"ez-toc-section\" id=\"1_budget_your_money\"><\/span><strong>1. Budget Your Money<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>It might sound like a chore but by budgeting your money you control your spending. When you can see where your money\u2019s going you can <a href=\"https:\/\/www.lendingstream.co.uk\/blog\/how-to-stop-spending-money-on-unnecessary-things\/\"><strong>find ways of cutting back<\/strong><\/a>. It\u2019s much better to use your overdraft for emergencies rather than for everyday spending.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"2-download-your-bank-s-app-if-they-have-one\"><span class=\"ez-toc-section\" id=\"2_download_your_banks_app_if_they_have_one\"><\/span><strong>2. Download Your Bank\u2019s App (if they have one)<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>If you have a smartphone, having your banking app on it can give you quick access to your account. You can check your bank balance before you spend. And it lets you keep an eye on where your money\u2019s going any time of the day.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"3-set-up-text-alerts-for-when-your-account-is-running-low\"><span class=\"ez-toc-section\" id=\"3_set_up_text_alerts_for_when_your_account_is_running_low\"><\/span><strong>3. Set up Text Alerts for When Your Account is Running Low<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>Most banks give you the option of sending you a text message when your account falls below a certain amount. This is useful as you\u2019ll be more careful with your spending when you know your account balance is low.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"will-overdrafts-stop-you-from-getting-loans\"><span class=\"ez-toc-section\" id=\"will_overdrafts_stop_you_from_getting_loans\"><\/span><strong>Will Overdrafts Stop You from Getting Loans?<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>How an overdraft affects your loan applications will depend on how you\u2019ve used it. <strong>If you\u2019ve managed your overdraft well, it\u2019ll have a positive impact on your credit report.<\/strong> This could help you with your loan applications as it shows that you can manage your money well.<\/p>\n\n\n\n<p>If you don\u2019t manage your overdraft well and you keep spending up to or over your limit, this will hinder you. Lenders will be able to see that you haven\u2019t been able to keep your spending under control. And this would influence their decision on whether to lend to you or what interest rate they offer you.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"what-alternatives-are-there-to-having-an-overdraft\"><span class=\"ez-toc-section\" id=\"what_alternatives_are_there_to_having_an_overdraft\"><\/span><strong>What Alternatives are there to Having an Overdraft?<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>There are other ways of borrowing money that you might prefer. Here are some options.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"1-credit-cards\"><span class=\"ez-toc-section\" id=\"1_credit_cards\"><\/span><strong>1. Credit Cards<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>These allow you to borrow money up to a limit set by the lender. The good thing about credit cards is that if you pay off your balance in full when it\u2019s due, you pay no interest. This makes them a cheap way of borrowing money short term.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"2-short-term-loans\"><span class=\"ez-toc-section\" id=\"2_short_term_loans\"><\/span><strong>2. Short Term Loans<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>If you just need a <a href=\"https:\/\/www.lendingstream.co.uk\/loans\/small-loans\/\"><strong>small amount<\/strong><\/a> of money to cover an emergency, a <a href=\"https:\/\/www.lendingstream.co.uk\/loans\/short-term-loans\/\"><strong>short term loan<\/strong><\/a> can help. It allows you to pay back the money you borrow over a short period. Having a little longer to pay it off can help with your budgeting. And a short term loan could be cheaper than an overdraft if the interest rate is lower.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"can-i-switch-bank-accounts-if-i-ve-got-an-overdraft\"><span class=\"ez-toc-section\" id=\"can_i_switch_bank_accounts_if_ive_got_an_overdraft\"><\/span><strong>Can I Switch Bank Accounts if I\u2019ve Got an Overdraft?<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Yes, it is possible to <a href=\"https:\/\/www.currentaccountswitch.co.uk\/\" target=\"_blank\" rel=\"noopener\"><strong>switch bank accounts<\/strong><\/a> if you\u2019ve got an overdraft. <strong>When you switch bank accounts in the UK, you use the Current Account Switching Scheme (CASS)<\/strong>. This system transfers all your direct debits and payments to your new bank account for you.<\/p>\n\n\n\n<p>But you\u2019ll need to take some action if you\u2019re using your overdraft when you want to switch.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"1-switching-bank-accounts-with-an-overdraft-you-re-not-using\"><span class=\"ez-toc-section\" id=\"1_switching_bank_accounts_with_an_overdraft_youre_not_using\"><\/span><strong>1. Switching Bank Accounts with an Overdraft You\u2019re Not Using<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>If you had an overdraft on your old bank account but weren\u2019t using it, you don\u2019t have to do anything. You can switch accounts without any problem. But if you want an overdraft with your new bank account, then you\u2019d have to apply for one with them.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"2-switching-bank-accounts-with-an-overdraft-you-re-using\"><span class=\"ez-toc-section\" id=\"2_switching_bank_accounts_with_an_overdraft_youre_using\"><\/span><strong>2. Switching Bank Accounts with an Overdraft You\u2019re Using<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>If you\u2019re overdrawn and you want to switch bank accounts, there are two options available to you.<\/p>\n\n\n\n<ul class=\"wp-block-list\"><li><strong>Ask your new bank if they\u2019ll let you transfer your overdraft. <\/strong>If they do, make sure you check that the rates they charge aren\u2019t higher.<\/li><\/ul>\n\n\n\n<ul class=\"wp-block-list\"><li><strong>Pay off your overdraft before you switch. <\/strong>If you\u2019ve got savings, you could use them to pay off your existing overdraft.<\/li><\/ul>\n\n\n\n<p>Otherwise, you may have to borrow money to clear the overdraft with your old bank before you switch accounts. If you do this, check the interest rate on the loan isn\u2019t higher than the rate on your overdraft.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"faqs\"><span class=\"ez-toc-section\" id=\"faqs\"><\/span><strong>FAQs<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n<div id=\"rank-math-faq\" class=\"rank-math-block\">\n<div class=\"rank-math-list \">\n<div id=\"faq-question-1671477584296\" class=\"rank-math-list-item\">\n<h3 class=\"rank-math-question \"><span class=\"ez-toc-section\" id=\"can_the_bank_remove_your_overdraft\"><\/span>Can the Bank Remove Your Overdraft?<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<div class=\"rank-math-answer \">\n\n<p>Yes, the bank can remove your overdraft which is something to be aware of. <strong>Your overdraft is not guaranteed. <\/strong>The bank can either reduce your overdraft limit or remove your overdraft at any time. The reason they\u2019d do this is if they think you\u2019re overusing it or if you\u2019re in financial difficulty.<br \/>If the bank takes away your overdraft for no reason, you have the right to complain about it. Especially if you get charged as a result of them removing it.<\/p>\n\n<\/div>\n<\/div>\n<div id=\"faq-question-1671477601955\" class=\"rank-math-list-item\">\n<h3 class=\"rank-math-question \"><span class=\"ez-toc-section\" id=\"can_a_student_overdraft_affect_your_credit_score\"><\/span>Can a Student Overdraft Affect Your Credit Score?<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<div class=\"rank-math-answer \">\n\n<p><strong>A student overdraft affects your credit score in the same way that a standard overdraft would.<\/strong> This means that if you manage your overdraft well it could <a href=\"https:\/\/www.lendingstream.co.uk\/blog\/improve-your-credit-score\/\"><strong>improve your credit score<\/strong><\/a>. But if you use it all the time or go over your limit, it\u2019ll hurt your credit score. Using the tips in this guide will help.<\/p>\n\n<\/div>\n<\/div>\n<div id=\"faq-question-1671477621885\" class=\"rank-math-list-item\">\n<h3 class=\"rank-math-question \"><span class=\"ez-toc-section\" id=\"does_applying_for_an_increase_in_your_overdraft_affect_your_credit_rating\"><\/span>Does Applying for an Increase in Your Overdraft Affect Your Credit Rating?<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<div class=\"rank-math-answer \">\n\n<p>The answer to this question depends on the bank<strong>. <\/strong>If they do a soft credit check it won\u2019t affect your credit rating. But if they do a hard credit check it will. Check with your bank before you apply to increase your overdraft, so you know what kind of check they\u2019ll do.<\/p>\n\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n\n\n<p><strong>Disclaimer:<\/strong> We are not providing financial advice. These are just tips for informational purposes. Also, we are not affiliated to any of the external parties linked here, they are provided for reference only.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>If you\u2019ve ever wondered how an overdraft affects your credit score, you\u2019re not alone. A lot of people don&#8217;t understand how this type of borrowing works and what it can do to their credit rating. It\u2019s important to understand how everything you do affects your credit score. Especially when you \u2018re trying to get your [&hellip;]<\/p>\n","protected":false},"author":48,"featured_media":26966,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[267],"tags":[],"class_list":["post-26964","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-loans"],"_links":{"self":[{"href":"https:\/\/www.lendingstream.co.uk\/blog\/wp-json\/wp\/v2\/posts\/26964"}],"collection":[{"href":"https:\/\/www.lendingstream.co.uk\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.lendingstream.co.uk\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.lendingstream.co.uk\/blog\/wp-json\/wp\/v2\/users\/48"}],"replies":[{"embeddable":true,"href":"https:\/\/www.lendingstream.co.uk\/blog\/wp-json\/wp\/v2\/comments?post=26964"}],"version-history":[{"count":2,"href":"https:\/\/www.lendingstream.co.uk\/blog\/wp-json\/wp\/v2\/posts\/26964\/revisions"}],"predecessor-version":[{"id":26967,"href":"https:\/\/www.lendingstream.co.uk\/blog\/wp-json\/wp\/v2\/posts\/26964\/revisions\/26967"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.lendingstream.co.uk\/blog\/wp-json\/wp\/v2\/media\/26966"}],"wp:attachment":[{"href":"https:\/\/www.lendingstream.co.uk\/blog\/wp-json\/wp\/v2\/media?parent=26964"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.lendingstream.co.uk\/blog\/wp-json\/wp\/v2\/categories?post=26964"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.lendingstream.co.uk\/blog\/wp-json\/wp\/v2\/tags?post=26964"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}