Last updated on July 30th, 2022 at 02:31 pm
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So you want to open an online stock trading account with Fidelity but you’re worried about your credit being impacted. Does opening a Fidelity account affect your credit though?
Neither Fidelity or any other brokerage will pull your credit when opening a normal brokerage account. Since you are trading/investing with your own money it doesn’t matter what your credit score is.
Since they don’t check your credit at all they also won’t do a hard pull of your credit so you don’t have to worry about that showing up on your credit report if you are trying to get a loan, credit card, etc.
Some people think that they will check your credit but that isn’t the case unless you are opening a margin account (and even that doesn’t mean they will do a hard pull). In most cases even a margin account will only require them to do a soft pull of your credit.
If you’re wondering how opening a stock trading account with Fidelity (or any other online broker for that matter) will impact your credit then this article is for you!
Does Opening a Fidelity Account Affect Your Credit?
When you sign up to create a Fidelity online stock trading account, many people think that they check your credit which is why they need your social security number and other information… but this isn’t true!
Brokerages need your information to verify your identity and to make sure that they report any gains or losses in your account to the IRS but they don’t do any sort of credit check.
They do this to ensure you are who you say you are so that way they can be sure they are sending the tax information to the IRS about the right person.
Brokerages do not issue credit (unless it’s a margin account) so they have no reason to check your credit worthiness since they aren’t loaning you anything (with a normal trading account).
Does Fidelity Do A Hard Pull Of My Credit Report?
If you are trying to get a house loan, car loan, or even a new credit card it’s a good idea not to get too many hard inquires on your credit report. So you will want to know if opening a trading account with Fidelity will cause them to do a hard pull on your credit.
Fidelity does not do a hard pull on your credit when creating a brokerage account for you. The only reason why they need your info is to verify you are who you say you are.
Fidelity gets this information to verify your identity and to make sure that they are reporting the transactions to the IRS properly under the correct person. Afterall you don’t want to pay taxes on someone else’s trades and neither do they.
So getting all of the information such as address, DOB, SS number, etc. is required with all brokerages.
What is a Hard Inquiry Or Hard Pull Credit Check?
A hard pull — also referred to as a hard credit check or inquiry — requires you to consent in order to be pulled. It is triggered typically when you apply for credit such as a:
- Auto loan
- Credit card
- Student loan
- Personal Loan
However, a hard inquiry could also be made when applying to rent a car, or to apply for an apartment.
Unlike a soft inquiry, hard inquiries become part of your credit report and can be seen by anyone who pulls your credit.
This inquiry typically remains on your credit report for 2 years or so but usually stops impacting your credit score in less than a year.
How Does a Hard Pull Affect Your Credit Score?
Hard inquiries can shave up to 5 points off your FICO score per inquiry.
Thankfully, with the most-used FICO model, any hard inquiries that occur within a 45 day period are grouped together as one. This is considered “rate shopping”.
VantageScore and older FICO models consider all inquiries as one as well, but only when they occur within a 14 day period.
A single hard pull credit check can shave up to 10 points off a VantageScore credit score.
However, most card issuers or lenders will pull a credit report from only one of the three major credit reports:
- And Equifax
This means the inquiry will only show up on one of your three credit reports. The only exception here is when you apply for a mortgage as the lender will usually check all three reports.
If you can, it would be wise to keep hard inquiries to a minimum. This is something to think about before buying a car, getting a credit card, etc.
If you have impeccable credit, a few points won’t be that big of a deal. On the other hand, if you have borderline or poor credit then a few points being shaved off could be detrimental to getting that local or credit card you want.
What is a Soft Pull Credit Check?
Unlike hard inquiries, soft pulls (soft inquiries, soft credit checks) can be done without you even knowing about it.
For instance, if you ever received an offer for a credit card in the mail, it’s likely the company who issued the offer did a soft pull of your credit to see if you were likely to qualify or not.
The same goes for similar types of loan offers or when a mortgage lender or broker does a preapproval or pre-qualification.
Your potential employer can also pull a soft inquiry of your credit history when performing a background check. This is a modified credit report that does not impact your credit.
While it does require your consent, it’s not considered a hard pull because it isn’t done for the purpose of determining whether or not to extend you a line of credit.
One of the most common soft inquiries that is done is when you check your own credit using a service like CreditKarma or NerdWallet.
You might see the soft inquiries on your credit reports when you look at them, however, they don’t show up on the reports creditors will see.
Should I Open a Fidelity Account?
Now that you know the answer to the question “Does opening a fidelity account affect your credit?” you’ll need to determine whether you want to open a Fidelity account or not.
Since no brokerages will affect your credit for a normal stock trading account you can use whichever company you feel is best for your goals whether that is Fidelity or a different brokerage.
You can even open multiple accounts with different brokerages to see which one works best for you (this is what I do). Ultimately only you can decide whether a specific brokerage meets your needs or not but since you don’t have to worry about your credit that’s one less thing that you have to consider.
Opening a stock trading account with Fidelity can offer a lot of benefits for new and seasoned investors.
Not only does it cost nothing to open the account, but you get to buy and sell stocks, mutuals, and ETFs commission-free.
Ultimately you have to decide if the app/website that Fidelity offers works for you or if you like a different broker’s site or app better.