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Will Opening Multiple Brokerage Accounts Hurt My Credit Score?

I don’t know if you’ve been paying much attention to the stock market but it’s been on a tear recently. Up until last week’s Cyprus news, the stock market has been going up up up and brokerages have taken note. They see the money flowing back into the market, now that the fear and uncertainty have largely left the market (until Cyprus), and brokerages have been offering some pretty rich bonuses when you sign up.

Whenever you have big bonuses, you know there are big bonus hunters out there churning through accounts and trying to claim as much of that free money as possible. It’s fairly easy, just deposit the requisite amount, wait, and collect your bonus money. It usually will be better than what you get in a savings account [3], even after you factor in the commissions.

The next question you have to ask yourself is whether doing this will hurt your credit (or anything else)?

The answer is probably yes. Opening a brokerage account is not like opening a savings account, which has no negative effect, it’s more like applying for a credit card. The broker will usually do a hard inquiry of your credit because they will want to offer you a margin account, where you borrow money from them for short term needs like transactions are clearing. This hard inquiry is going to hurt your score but the effect usually dissipates after a few months.

As for using and closing a brokerage account, those won’t affect your score. They don’t report payment history to the bureaus so you don’t see it on your report, it’s a lot like a landlord pulling your credit for rental purposes. No reporting and no history means no credit benefit.

So if you’re going to chase broker bonuses, just know that it can have a short term impact on your credit.