Having an overdraft can be really handy – whether it’s covering an unexpected bill or giving you a bit of breathing space before payday. But many people wonder: does overdraft affect credit score? The short answer is yes – how you use your overdraft can have an impact on your credit score. Let’s break it down.
When you open a current account with an overdraft, lenders can see this on your credit report. They’ll be able to see:
Your overdraft limit
How much of it you’re using
If you’ve gone over your agreed limit
Whether you’ve made regular payments to bring the balance down
This information helps lenders decide how well you manage borrowing.
Having an overdraft isn’t bad for your score in itself. In fact, using it carefully can show lenders that you’re a reliable borrower. Here’s what helps:
Staying within your limit – consistently going beyond your agreed overdraft can damage your credit score.
Paying it back regularly – even small repayments show you’re taking steps to clear it.
Not relying on it too often – dipping in occasionally is different from being permanently in the red.
You can check how your overdraft is reported by logging into your ClearScore account.
If you regularly max out your overdraft, or go over the limit, this can signal financial stress to lenders. It may also make it harder to get other types of credit, like loans or credit cards. Think of your overdraft as a short-term safety net, not a long-term borrowing solution.
If you want to improve how lenders see you, try:
Budgeting for the basics – planning ahead can help you avoid dipping into your overdraft.
Clearing it bit by bit – even small regular payments reduce what you owe over time.
Exploring alternatives – for bigger expenses, you may find a personal loan or credit card is a more affordable option
So, does overdraft affect credit score? Yes – but it depends how you use it. Staying within your limit and paying it back regularly can show lenders you’re in control. But if you’re constantly relying on it or going over, it could bring your score down. Want to see how your overdraft (and other borrowing) shows up? Check your free credit report with ClearScore today