Is the Wells Fargo Controversy Damaging Your Credit Score?

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.

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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.