Do Overdrafts Make A Credit Score Worse?

Do Overdrafts Make A Credit Score Worse?

An overdraft is a form of borrowing that can be either authorised or unauthorised. It should be thought of as an emergency fund, not an extension of your bank account that you access regularly.

Used responsibly, an authorised overdraft shouldn’t impact your credit rating. If you keep it pretty much up to the limit for an extended period of time, however, then it could have an impact on a lenders decision.

Using an unauthorised overdraft to cover payments for which you don’t have the funds will definitely have a negative impact on your credit rating.

If you have a large overdraft facility in place, even if you don’t access it much or even at all, it may have an impact on how much you can borrow for other purposes.

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