How Opening a CD Could Affect Your Credit Score

Opening a certificate of deposit is a savings strategy, not a credit event. While it involves a financial institution, it doesn’t directly impact your credit score the way applying for a loan does.

1. Initial Account Opening: Unlike applying for a credit card or loan, opening a CD typically does not require a hard credit inquiry. Financial institutions may perform a soft pull to verify your identity, which does not affect your credit score.

2. The Funding Source: How you fund the CD matters. If you use existing savings, there is no credit impact. However, if you take out a personal loan to fund the CD, that loan application will trigger a hard inquiry and add a new debt account to your credit report.

3. CD-Secured Loans: You might use your CD as collateral to obtain a loan, often to build or repair credit. This new loan and its payment history are reported to credit bureaus, which can impact your score—positively, if managed well.

4. Indirect Financial Health: While a CD doesn't directly boost your score, the savings discipline it represents contributes to overall financial stability. This can indirectly improve your creditworthiness by reducing your future reliance on debt.

How Much Will Opening a CD Affect Your Credit Score?

While opening a certificate of deposit (CD) generally has a minimal effect on your credit, there are a few factors to consider.

• Hard Inquiry: Opening a CD may trigger a hard inquiry on your credit report. This can cause a small, temporary dip in your score, but the impact typically fades within a few months.
• Credit Mix: CDs are deposit accounts, not credit products, so they don't usually affect your credit mix. Your score benefits more from a mix of loans and credit cards, which demonstrate responsible borrowing.
• Account History: Some banks might report your CD to credit bureaus as a type of installment account. If so, it can positively influence your credit history length over the long term.

How You Can Avoid Opening a CD Affecting Your Credit Score

Seek Out Soft Credit Inquiries

When shopping for a CD, ask if the financial institution uses a soft or hard credit pull. A soft inquiry is typically for identity verification and does not impact your credit score, making it the ideal choice for savers looking to open a new account.

Inquire Before You Apply

Before submitting an application, directly contact the bank or credit union to ask about their policy for opening deposit accounts. This proactive step ensures you know whether a hard credit check will be performed, helping you avoid an unnecessary impact on your credit report.

Choose the Right Card to Opening A CD

Improving your credit score is an achievable goal that hinges on consistent, positive financial behavior. According to an expert guide for 2025, most people can see meaningful changes within three to six months by taking a few proven steps.

• Establish automatic bill payments. Your payment history is the most significant factor in your score, so setting up automatic payments and reminders ensures you never miss a due date.
• Reduce your credit utilization ratio. Aim to keep your credit usage below 30% by paying down balances or requesting credit limit increases to show lenders you manage credit responsibly.
• Monitor your credit reports regularly. Obtain your free reports from all three major bureaus to identify and dispute any inaccuracies, which can unfairly lower your score.
• Become an authorized user. You can get added to someone else's credit card account that has a strong payment history and low utilization to potentially boost your own score.
• Diversify your credit mix. Lenders like to see that you can handle different types of credit, so maintaining a healthy mix of accounts like installment loans and credit cards can be beneficial.
• Limit hard inquiries. Avoid applying for too many new credit accounts in a short period, and use prequalification tools to shop for rates without impacting your score.

The Bottom Line

Opening a Certificate of Deposit (CD) will not affect your credit score. Since CDs are deposit accounts rather than loans, your activity is not reported to the major credit bureaus.

Frequently Asked Questions

Does opening a CD affect my credit score?

Opening a CD does not directly impact your credit score. It is a deposit account, not a line of credit, so it doesn't require a hard inquiry.

Do CDs appear on my credit report?

No, CDs are not debt instruments and are not reported to the major credit bureaus. Therefore, they will not show up on your credit report.

Can a CD help me build credit?

While a standard CD won't build your credit history, a CD-secured loan can. This loan uses your CD as collateral and is reported to credit bureaus.