Martin Lewis has issued a warning for anyone tempted by the cash bonuses at other banks for switching accounts.
Speaking on this morning's (April 19) Good Morning Britain, he received a question from a viewer who wanted to know if switching a bank account would damage her 'credit rating'. Mr Lewis has previously explained to consumers that they could receive a cash bonus by switching bank accounts under the right conditions.
However, depending on a person's circumstances, this is not always the right move.
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Mr Lewis said: "Well you don't have a credit rating, you are credit scored individually by each firm. But evidence of longevity of a bank account tends to be good for your credit scoring.
"What I would say is, it's very trivial switching bank and the benefits are good so do it. But if you're within three months of a major credit application such as remortgaging - that's bad timing. Don't do it in the three months in a run-up...or a big balance transfer."
He then explained which banks are currently paying customers to switch accounts. He highlighted HSBC which is offering £200, NatWest and Royal Bank of Scotland who are offering £200 plus up to £36 a year cashback, and first direct which is offering £175 cash plus 7 per cent saver with a £250 overdraft.
Before going through with some of these switches, Mr Lewis warned that some switches may include a credit check and advised looking into the eligibility for the switch before applying. He also highlighted that regularly switching bank accounts for the cash bonuses could negatively impact your credit rating and damage your chances of getting credit.
Credit scores are not a universal thing and can vary from firm to firm. According to HSBC, there are three main credit reference agencies (CRA) in the UK which all use different scoring systems to define the quality of a person's finances: Experian, Equifax, and TransUnion.
If you are concerned about your current credit score and want to check it before switching bank accounts, all three CRAs in the UK offer a free credit report service. While these are not universal, it can give you a rough idea of where your credit rating is currently at.
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