Do you close your account at a bad bank?

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Dear Dr. Don,
I have checking and savings accounts at two different credit unions. At Evil Credit Union, I have been a banking customer for 15 years. At Good Credit Union, I have been a customer for more than seven years. I hate Evil Credit Union because their customer service is terrible. I want to close the account, but I plan to buy a home in the next five years.

I believe it looks good to have had a bank account for that long, and it helps when you are trying to get a loan. I am wondering if I should just suck it up with Evil Credit Union.
— Amy Agonizes

Dear Amy,
Your bank relationships aren’t all that important in the mortgage lending decision. The lender will focus on your credit history and monthly income in making the decision to lend.

It’s the information in your credit report that’s used to calculate a credit score. The length of your credit relationships is important, and you wouldn’t want to cancel credit cards prior to applying for a mortgage. However, you would want to pay down the outstanding balances on the cards.

There is a consumer reporting agency, ChexSystems, which monitors your bank relationships like the credit bureaus monitor your credit history. Negative information about your banking history stays on this report for five years. Just as you are entitled to an annual free copy of your credit report, you are entitled to a free annual copy of this report.

Feel free to end your banking relationships with Evil Credit Union. It won’t negatively impact your ability to get a mortgage loan when you apply for one in the future.

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