As an overdraft is a form of credit, it can affect your credit score and report. An overdraft will appear on a credit report as debt, so lenders can see if a customer has an overdraft, as well as the limit and what they are using.
Unless you go beyond your overdraft limit or have payments refused, an arranged overdraft is unlikely to negatively impact your credit score.
Using an arranged overdraft wisely, such as regularly clearing the overdraft and staying in the agreed limit, can even improve your credit rating. Lenders will be able to see you are a reliable borrower. This means you are more likely to be approved for other credit applications. You can read our guide on credit to find out how making full credit repayments on time can improve your credit score.
Regularly going over the overdraft limit will harm your credit rating, as it shows lenders you are struggling financially. Using an unarranged overdraft also signifies to lenders you are struggling to manage your finances, so can damage your credit rating.