Does Robinhood Check Your Credit Score?

Does Robinhood Check Your Credit Score?

When opening an account in the Robinhood app, people may be wondering how this can affect their credit score or does the app needs to check it before you start investing.

Robinhood may do a credit check to verify your identity to create an account, but they don’t run a credit score check. This means that you can open an account without having to pull your credit score.

Credit scores are important because they impact many aspects of lives, such as the ability to get a loan. When lenders or institutions offer loans, they want to know that the borrower will return their money. Of course, with additional interest, because lenders want to make money.

Giving loans to people, who will not be able to pay them back is not profitable. That’s why there are many important factors when it comes to lending decisions. A credit score is a number that will show lenders if you’re in a good financial position to take up the loan they offer.

Does Robinhood check your credit score?

Robinhood doesn’t run a credit check on users. However, they may do a credit check to verify your identity. For some other investing apps, when you sign up to create an online stock trading account, it can be different. They may check your credit history and credit score. 

This is done in order to make sure you don’t lie about your identity and have a history of paying bills. Also, credit scores can be checked in certain situations. For example, when you need to borrow money. 

Robinhood offers investing on margin, which means that you can borrow money from Robinhood to invest in stocks. This can help you get greater gains as well as greater losses. However, this feature is not available to everyone. You should upgrade your account to Robinhood Gold to enable borrowing.

Investing on margin involves interest and many risks, that’s why there are additional Robinhood Financial’s lending policies. If users want to start margin trading, they should definitely take a look at Robinhood Financial’s Margin Disclosure Statement, Margin Agreement, and FINRA Investor Information

Robinhood Financial And Robinhood Securities Customer Margin And Short Account Agreement it is stated: “Robinhood is authorized, in its discretion, should Robinhood for any reason deem it necessary for its protection to request and obtain a consumer credit report for the Customer.”

This means that Robinhood can check your credit score if that’s necessary. But this only applies to cases related to margin trading. Users of standard investing plans are not affected by this agreement.

Does Robinhood do a hard inquiry?

Does Robinhood Check Your Credit Score?

A hard inquiry is when a creditor, for example, wants to check your credit score to determine if there is a certain risk of having you as a borrower. Also, hard inquiries show up on your credit report. It is good to know that hard inquiries can affect your credit score. That’s why you need to be cautious when a lender does a hard inquiry.

With every new hard inquiry, your credit score drops by a few points. This is because the frequent application for credit serves as a sign that you have financial issues or an unstable financial situation. This will affect lenders’ decision to give you a loan, as they may see you as a high-risk borrower.

Robinhood doesn’t do a hard inquiry. The investing app does not pull your credit score, that’s why you can easily open your account without worrying about the credit score. In the case of margin trading using Robinhood is authorized to check your credit score, however, it’s not mentioned in Robinhood lending policies that they can do a hard inquiry.

Can you open a Robinhood account with a bad credit score?

As mentioned before, Robinhood does not check your credit score. That’s why even if you have a bad credit score, you can still open a Robinhood account. But what does a bad credit score mean? 

Once your credit score is below 690 to 700, the lenders see that you may have issues with repaying a loan. When your credit score is somewhere in the middle 600s, you may pay a higher interest rate on some loans. Below 620 is considered to be fair, however, you may have some problems with lenders extending credit and high-interest rates as well.

A very poor credit score is anywhere from 300 to around 580. With this type of score, you will struggle with getting any loan, that’s why you want to make sure your score is in the good range. 

There are many things that can hurt your credit score. They include housing foreclosures, filing of bankruptcy, missed payments, etc. Your credit card debt also has a very negative impact on your score.

But again, even having a very poor credit score will not be an issue when signing up for Robinhood. 

Of course, a bad credit score can affect your opportunity to do margin trading. As mentioned previously, Robinhood Financial’s lending policies state that Robinhood can check your credit score to see if you’ll be able to return borrowed money for investing. Margin trading requires a good trading strategy, as it involves risks of great losses.

Does Robinhood affect your credit score?

Does Robinhood affect your credit score?

Investing in Robinhood will not affect your credit score, because stock investments generally don’t do that. Robinhood doesn’t do a credit check. Many stock trading companies, like Robinhood, may run a credit check on users before opening an account for identity verification. This inquiry can show up on your credit report, but it will not impact your credit score.

There are certain types of credit inquiries, but not all of them will hurt your credit score. This may also include inquiries from companies that offer stock trading online.

There are 5 main factors that affect your credit score:

  • your payment history
  • amount of money you own
  • credit mix
  • new credit
  • your credit history

The most important factor in your credit score is payment history. It shows how you make your payments, meaning that when you make a payment on time your score improves, but if you miss payments – your score will be lower. 

You would want to avoid missing payments because it can take several months to restore your credit score to the number it was. And even if after that you do all other payments on time, your credit score will not be restored faster.

Moreover, your payment history makes up the greatest portion of the credit score. That’s why if you want to increase your score, you need to make on-time payments and try to avoid late payments at all costs. As mentioned above, when you miss a payment, it will take a long time to restore your credit score to the way it was before the missed payment. 

Another factor is the amount of money you owe. If you owe a lot of money, then your credit score will be lower. So, to improve your credit score you need to minimize the amount you owe. Here credit utilization is also taken into consideration. Credit utilization is a ratio of debt to credit limits of your lines of credit. The higher credit utilization, the lower is the credit score.

Credit mix means that you have a history of dealing with different types of debt, for example, car loans, student loans, mortgages, etc. When you have several types of loans on your credit reports, then you may have a higher credit score.

Does Robinhood affect your credit score?

New credit is basically the number of accounts you have, how many new accounts you’ve applied for recently, which result in several hard inquiries. And the last one is your credit history. This means that if you have a long history and more experience with credit, then your credit score tends to be higher.

In conclusion, if you want to open your investing account on Robinhood, you should not be worried about your credit score. Robinhood doesn’t check it unless you are using a special feature for margin investing. But it’s worth pointing out that a bad credit score will have a negative influence on many aspects of your life. 

Keeping a high credit score is important, as it gives you more opportunities and shows your creditworthiness. It will also show that you are more likely to repay the loan you’re taking. You need to take into consideration five important factors, such as payment history, amount of money you own, credit mix, new credit, and your credit history. This will help you to track your score and avoid problems with a bad credit score.

If you want to start using the Robinhood app for investing, but you were not sure if it checks your credit score or affects it in any way, hopefully, this article answers most of your questions. You will not have any issues signing up for Robinhood with a bad credit score. But keep in mind, that this can change if you choose to start investing on margin.


  • Tristan

    Tristan has a strong interest in the intersection of artificial intelligence and creative expression. He has a background in computer science, and he enjoys exploring the ways in which AI can enhance and augment human creativity. In his writing, he often delves into the ways in which AI is being used to generate original works of fiction and poetry, as well as to analyze and understand patterns in existing texts.