Are bank accounts used in credit scoring?

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Q. How are cash and liquid assets used in credit scoring?
— Credit aware

A. It’s a good question, but the money you have in the bank or in your 401(k) has nothing to do with your credit score.

“Credit score algorithms don’t include the amount of cash you have or even your net worth,” said Beverly Harzog, a consumer credit expert and bestselling author. “It’s possible to have a low net worth and still have an excellent score.”

Credit scores include factors such as your payment history and credit utilization ratio, which is the amount of credit you have used compared to the amount you have available. It also includes mix of credit, length of credit history and new credit, Harzog said.

However, the amount of cash and liquid assets could make you more desirable as a borrower.

“This is because you’d be able to convert those assets to cash to make your payments,” she said. “A lender will look at your score, but they also consider other factors, such as your credit report, income, assets, and so on.”

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