Posted on 2016-10-03 21:35:52
Sometimes you just have to shake your head in disbelief. That’s how it felt when news broke that Wells Fargo employees had opened at least two million new accounts behind their customers’ backs. Over a half million of those were credit card accounts. Why? Most cite intense pressure to meet unrealistic sales goals. And it has been going on for years—at least as far back as 2011, but maybe as far back as 2007. The Impact on Credit Scores A major concern to consumers should be how the Wells Fargo scandal may have impacted their credit scores. That’s a legitimate concern since it may be difficult, if not impossible, to know for sure because there are so many variables that can affect one’s credit score, and it can be different for each consumer depending on other factors on one’s credit report. Paul Bland, executive director of the legal advocacy group Public Justice said, “Figuring out what people’s actual damages are is really, really difficult. It’s going to take a lot of work and energy to unravel this.”
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New accounts opened fraudulently by Wells Fargo employees would typically be reported to the credit bureaus and show up on your credit report as a hard inquiry. Inquiries are usually not one of the major factors affecting your credit score, but in some cases, a few points difference in your credit score it could be enough to impact the terms of a loan or whether you are approved at all. Indeed, for some, another credit card could cause a credit score to go up because it raises the amount of available credit. This has the positive effect of lowering the percentage of available credit being used. But what happens when you choose to close the unwanted credit card account, as Wells Fargo is offering to do? It could have the opposite effect and lower your credit score because you will suddenly be using a greater percentage of available credit. Be Proactive with Credit Monitoring Many Wells Fargo customers were not aware of having a new Wells Fargo account until the scandal broke in the news. This reinforces the importance of keeping tabs on your credit report. It’s Wells Fargo in the spotlight today. Who will it be tomorrow? A credit monitoring service is the easiest way to keep tabs on your credit report on a daily basis. Subscribers are alerted when a new account is reported to the credit bureaus—not when it hits the news.
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