credit & debt

Is the Wells Fargo Controversy Damaging Your Credit Score?

Here's how to check all recent accounts opened in your name, plus your credit reports.

Wells Fargo has given its customers one more reason to take a hard look at their accounts. The bank recently disclosed that about 1.5 million deposit accounts and 565,000 credit card applications may have been opened by employees without customer permission, according to the Consumer Financial Protection Bureau. The bank is paying $185 million in fines to the CFPB, the Office of the Comptroller of the Currency and the Office of the Los Angeles City Attorney.

If Wells Fargo identified you as a victim in its review of accounts dating back to 2011, you should have already received a letter of notification and a check in the mail, or a message on your bank statement and an account credit, says Wells Fargo spokesperson Richele Messick. The bank has refunded $2.6 million so far, with an average credit of $25.

It’s still a good idea to check for any unfamiliar accounts in your name, however. Wells Fargo is now reviewing accounts opened in 2009 and 2010, and more could turn up.

If you have a mortgage, auto, student or other loan but no deposit or credit card accounts with Wells Fargo, you should be in the clear, says Messick, because such lending and mortgages fall under a separate division of the bank.

You can see all of your Wells Fargo bank and credit card accounts by logging in at www.wellsfargo.com. Or to talk to a bank representative, visit a branch or call the customer service phone number listed on your bank statement or on the back of your credit card.

Here are two other steps to take to keep your finances safe:

Check your credit reports. Go to www.annualcreditreport.com to get free copies of your credit reports from each of the major credit reporting agencies: Equifax, Experian and TransUnion.

A handful of states—Colorado, Georgia, Maine, Maryland, Massachusetts, New Jersey and Vermont—require that the bureaus provide an additional free copy to residents each year, which could be useful if you’ve already claimed your free reports at AnnualCreditReport.com in the past 12 months.

Some online credit tools offer credit report information at no charge. At CreditKarma.com, for example, you can sign up to see information from your Equifax and TransUnion reports.

Search your credit reports for credit card accounts that you don’t recognize. Banks don't report deposit accounts or debit cards to the three big credit agencies, although overdraft protection on a checking account may show up on credit reports, says credit expert John Ulzheimer, formerly of Equifax and credit-scoring company FICO.

If Wells Fargo checked your credit report in the past two years, that activity would show up as an inquiry on at least one of your credit reports (after two years, inquiries disappear from the reports).

Any inquiries that appeared on your report within the past year could be pulling down your credit score. If you believe that any Wells Fargo inquiries from the past year are tied to an account application that you didn’t request, you can ask the bank to have them removed, Ulzheimer says.

You may not necessarily want to close a credit card account opened by Wells Fargo without your knowledge. Shutting it down may seem like a no-brainer. But by doing so, you could lower the amount of credit available to you. That could increase the ratio of your credit card balances to your overall credit limits—which may cause your credit score to drop. "If you have a credit card on your credit report that has no balance and a large, unused credit limit, that’s very likely going to help your score," says Ulzheimer.

To keep your credit score in healthy territory, always try to hold your credit card balances to no more than 20% to 30% of your credit limits. Leaving an unused credit card account open may be your best bet as long as it’s not racking up annual fees or other charges.

In some instances, the Wells Fargo employees—given incentives in the form of bonuses that they could earn for meeting sales targets—moved money from customers’ original bank accounts to the new, unauthorized accounts. If the balances of the original accounts weren’t high enough to cover the transfers, they triggered overdraft or insufficient-funds fees.

In other cases, unauthorized credit card applications that the bank approved left customers with cards that incurred annual fees, interest charges or other fees. Some customers also had debit cards and PINs activated in their names or were enrolled in online banking without their knowledge. That's what you need to look for—and act upon.

Most Popular

Is the Stock Market a House of Cards?
investing

Is the Stock Market a House of Cards?

The stock market volatility we’ve been experiencing and the apparent disconnect with the broader economy have some investors wondering just that. But …
October 12, 2020
Stock Market Holidays in 2020
Markets

Stock Market Holidays in 2020

Is the stock market open today? Take a look at which days the NYSE, Nasdaq and bond markets take off in 2020.
October 12, 2020
10 Worst Things to Keep in Your Wallet
Scams

10 Worst Things to Keep in Your Wallet

Storing your passport book or card, a spare key, or any of these other important items in your wallet leaves you open to identity theft -- or worse.
October 9, 2020

Recommended

High-Tech Aids for Aging in Place
Caregiving

High-Tech Aids for Aging in Place

Apple Watch and other technology provides fast feedback, comfort for older users, and a powerful assist for caregivers.
October 1, 2020
Lending Money to a Friend in Need
Coronavirus and Your Money

Lending Money to a Friend in Need

If you lend money to a friend who has fallen on hard times, don't count on getting it back.
September 29, 2020
10 Things You'll Spend More on in Retirement
retirement

10 Things You'll Spend More on in Retirement

From reading materials to debt, the demands on your savings during your golden years might surprise you.
September 16, 2020
How to Catch a Rock-Bottom Rate
Buying & Leasing a Car

How to Catch a Rock-Bottom Rate

Rates on everything from home mortgages to car loans are at record lows. We’ll tell you how to qualify for the best rates.
August 27, 2020