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Posts: 107
Registered: ‎03-03-2013
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New "Overdraft Protection" affect credit? (applying for mort soon)

So...try to keep this short - applying for a mortgage soon, the bank, bbva compass, gives a quarter point discount if you auto-pay from a checking account with them.

Good deal - I sign up for a new checking account (have not previously done any banking/finance with them) - they hard pull my credit for the checking account (grumble...but whatever, quarter point off a 30yr mort is huge).

I get an email from them a few days later - "you were pre-approved for a BBVA Compass Overdraft Protection Line of Credit with a $500 credit limit".

So if i do this - will this be like a new credit account on my CR?  I'm about to apply for a mortgage, I don't want a new TL reporting to raise a flag with LO or UW.

Also, I understand that a new CC can drop your score at first when it starts being reported - new credit is a risk and all - does an overdraft protection LOC do the same?

Any input is appreciated!

Moderator Emeritus
Posts: 32,869
Registered: ‎08-04-2007
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Re: New "Overdraft Protection" affect credit? (applying for mort soon)

Some overdraft accounts do report, and they'll often report as a LOC. I have/had one through Penfed and NFCU and both reported.

 

If reported, it'll be scored as a revolving and like with all types of accounts, you could have issues with the new account ding and possible ding for the impact to AAoA, if any. I'd hold off until you close to accept.

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