Do money transfers affect your credit score?
Written by
Emily Tye
Reviewed by
Amy LancashireMoving money between your own bank accounts, or sending it to someone else, doesn't affect your credit score. Everyday transfers aren't recorded on your credit file. But if you use credit to move money, such as by using a money transfer credit card, it can affect your score. The difference comes down to whether you're moving your own money or borrowing.
What counts as a money transfer?
The phrase 'money transfer' can mean two different things.
The first is an ordinary transfer: moving money from one account to another. That might be between your own current and savings accounts, sending money to a friend or family member, or paying someone through a service like PayPal.
The second is a money transfer credit card, which moves borrowed money from your credit card into your bank account. This is a form of borrowing, not a simple transfer, and unlike an ordinary transfer, it shows up on your credit file. Read more in our guide ‘what is a money transfer credit card’.
Let’s tackle them one at a time.
Do standard money transfers affect your credit score?
No. Transferring your own money has no effect on your credit score.
The main credit reference agencies (Experian, Equifax and TransUnion) record your credit accounts, such as loans, credit cards and mortgages, along with how you manage them. Your current account can also appear, including any overdraft. What they don't record is the individual money moving in and out of your bank accounts. A one-off transfer isn't credit, so there's nothing to report.
Does a money transfer credit card affect your credit score?
Yes. This is the type of money transfer that involves your credit score, because you're borrowing rather than moving your own money.
A money transfer credit card can affect your score in a few ways, especially early on:
The application. Applying triggers a hard search on your credit file. This is visible to other lenders and can cause a small, short-term dip. Experian keeps a hard search on your file for 1 year, though the effect on your score usually fades well before then.
A new account. Opening a new credit account shortens the overall length of your credit history, which may negatively impact your credit score.
Higher credit utilisation. A money transfer uses up part of your credit limit, the same way spending on the card would. High credit utilisation can lower your score until you pay the balance down.
Your repayments. This is the big one. Paying on time can help your score over time, while missing payments harms it, and a default can stay on your file for 6 years.
Managed well, a money transfer card doesn't have to damage your credit. It's how you handle it that matters. If you're weighing one up, it's worth understanding the difference between a money transfer and a balance transfer first.
How can I protect my credit score when using credit to move money?
If you do need to use credit to move money, a few habits can help to keep the impact low:
Check your eligibility first. Use a credit card eligibility checker that runs a soft search before you apply for a credit card, as these don’t impact your credit score. Learn more about the difference between soft and hard credit checks.
Pay the balance down over time. A money transfer uses a big share of your limit at once, so your utilisation will rise. Chipping away at what you owe, ideally before any 0% period ends, brings utilisation back down and keeps interest off.
Pay on time, every time. Your payment history is one of the biggest factors in your score. Setting up an automatic payment for at least the minimum payment helps you avoid missing one.
Space out applications. Several credit applications in a short space of time can hurt your score. It helps to understand how applying for a credit card affects your score before you apply.
There are a range of financial products available that may suit your needs. We encourage you to research your options carefully and consider seeking independent financial advice before making any decisions. This blog is for informational purposes only and does not constitute financial advice.
