Does Robinhood Run A Credit Check Or Affect Your Credit Score?


Does Robinhood Run A Credit Check Or Affect Your Credit Score?

Last updated on August 23rd, 2022 at 06:34 pm

*This post may contain affiliate links. As an Amazon Associate we earn from qualifying purchases.

Robinhood makes it easy to invest without feeling like you have to know everything about the stock market. However, many beginners are worried about paying taxes, credit score issues, and so on. 

Robinhood App For Beginners - Pros...
Robinhood App For Beginners - Pros & Cons And How It Compares

It’s reasonable to assume Robinhood would require a credit check, especially since they need a social security number, income report, and bank information.

Robinhood doesn’t run a credit check or affect your credit score because they only need to verify your income and identification for tax purposes. Your credit score is irrelevant to Robinhood and other brokerage firms since you’re not trying to get a loan. 

Your Robinhood account also won’t be listed on your credit reports.

In this post, I will talk about how Robinhood affects your credit score, why you don’t need a good score to open an account, and how your profile impacts your credit. I will also talk about what happens when you close your brokerage account.

Do Robinhood Stocks Affect Your Credit Score?

Robinhood stocks don’t affect your credit score because they don’t require loans, down payments, or reliability. If you sell a stock too early or too late, you’re the only one who has to deal with the financial loss. 

Robinhood remains unharmed whether or not you benefit from buying and selling stocks with their firm.

Here’s why Robinhood stocks have no impact on your credit rating:

  • Robinhood doesn’t need to check your credit score, which means it won’t dip. According to Finance Buzz, Robinhood never runs a credit check. You’ve probably heard that when companies run credit checks, it can ding your score. You don’t have to worry about that happening with Robinhood accounts.
  • Buying and selling stocks don’t count as loans, so they’re not based on credit reliability. Getting a loan immediately affects your rating, but stocks are owned (or partially owned) shares that don’t require a loan.
  • You place money into your Robinhood account rather than paying directly from a credit card. If you open a brokerage account with another company and run it through your credit card, you might hurt your score if you can’t make the payments on time. However, Robinhood has you place the money in the app before trading stocks.

Do Brokerage Accounts Show Up on Credit Reports?

Brokerage accounts don’t show up on credit reports because they’re irrelevant to your trustworthiness. Credit reporting is based on how well you manage your loans, how quickly and reliably you make the monthly payments, and credit longevity. 

Since brokerage accounts don’t demand or provide these factors, they remain unconnected.

So, why don’t brokerage accounts show up on credit reports?

  1. None of your investments will ever affect your credit score, regardless of the brokerage firm. As long as you don’t use a direct credit card, as mentioned above, you’re good to go. Your investments are personally owned, so there are no loan or trust issues in the process.
  1. Retirement accounts are beneficial for your future, but not your credit. You might believe working toward your future always improves your credit rating, but that’s only true if there’s a loan or similar agreement involved. Nevertheless, retirement investments are crucial to long-term success.
  1. You’re the only person affected by your losses and gains (unless you have a financial advisor who makes a percentage of your profit). Either way, you’re not damaging your credit rating because you aren’t missing loan payments or closing loan accounts.

Do You Need a Credit Score to Buy Stocks on Robinhood?

You don’t need a credit score to buy stocks on Robinhood. In fact, you can have unestablished credit or a terrible score and make a great profit through the app or website. However, excellent progress on Robinhood doesn’t translate to a better credit score either.z 

Your actions on the app have zero impact on your loan reliability or longevity and are not reported to the credit bureaus 

You might not pull yourself out of a credit rut with Robinhood, but there’s no doubt that it can provide a little bit of financial wiggle room. Consider using your profits to pay off credit loans and raise your score to reward your efforts. It doesn’t seem like the most exciting way to profit, but it’s essential for buying houses, cars, and opening credit lines.

Note: Nerd Wallet shows credit reports look for income levels, debt to income ratios, history/longevity, reliability, and how often you pay more than you were required. These factors can be impacted by buying and selling stocks on Robinhood if you’re a day trader as your sole career. 

Is It Bad for Your Credit to Close a Robinhood Account?

It’s not bad for your credit to close a Robinhood account since they’re not linked. You can open and close as many brokerage accounts as you want without damaging your credit score, as long as they’re not linked to credit card loans or credit cards purchased through the firm.

You should know these tips before closing any accounts:

  • Experian claims closing a Robinhood account doesn’t ruin your credit score or history (two of the most important factors in determining your credit rating). You can open an account and close it a week later or ten years later without doing anything to your credit rating. The timing is entirely up to you.
  • Never close a credit account unless advised otherwise by a financial professional. Whether you have a credit card, car loan, house mortgage, or anything in between, you shouldn’t close it without contacting an expert. Some people tie their house to their brokerage account by paying the mortgage through a retirement account.
  • The stock market is entirely different from the credit market. Although it might seem like they both involve risks and rewards, these entities don’t collaborate or connect (unless you tie them together with a loan and a retirement account, as you read in the previous example).

Final Thoughts

Now that you know that Robinhood isn’t impacting your credit, you can invest with confidence. There’s no reason to stress about lowering your score or requiring a designated limit to open a brokerage account. 

Furthermore, your retirement investments aren’t impacted by your credit score, and your credit score is not affected by them. 

Recent Posts