Are you a Well’s Fargo customer? If you have a personal line of credit with Wells Fargo, it’s highly likely that your credit score will be affected.
Recent letters have been distributed by the bank notifying customers that they are “shutting down all existing personal lines of credit in coming weeks,” according to CNBC. And this comes after Well’s Fargo suspended all new home equity lines of credit last year.
Will Wells Fargo closing personal credit lines affect my credit score?
If you have a personal credit line with Well’s Fargo, then most likely. Your credit score is calculated with multiple credit scoring models: the most common are FICO® or VantageScore models.
In these models, there are multiple factors that can affect your credit score, like:
- Making payments to lenders on time
- Number of accounts you have open
- Total credit available to you
- How long an account has been open (history)
- Total debt balances
- Number of credit inquiries (hard inquiries)
If you have a personal credit line with Wells Fargo and they close it, that means at the very least it will affect:
- The number of accounts you have open
- The total credit available to you
- How long an account has been open (history)
How much will it hurt my credit score?
If you have a lot of accounts, or the personal line of credit makes up a marginal percentage of total credit available, or if the line of credit hasn’t been open/active for very long, you may not see a noticeable effect on your credit score.
But if you’re on the opposite end of the spectrum, let’s say:
- The Wells Fargo personal credit line makes up a majority of your total available credit, and
- You’ve been a customer for multiple years, and
- Have made all your payments on time
You’re going to see a much harder hit to your credit score.
What can I do to minimize the negative credit impact?
You can improve your credit score to offset a negative impact by:
- Correcting inaccurate information in your credit report
- Reducing your total debt balance
- Making more than one payment per month
- Increasing your total credit limit
- Opening a new account (only if you are not regularly applying for new credit)
- Negotiating your outstanding balance
- Ensuring payments aren’t late
With all the variables and unique financial situations that people face, we’d recommended contacting one of our Financial Coaches. They’ll analyze your history, current situation, and present realistic options to improve your credit or reduce your impact from a lost account.
If you have an open balance with Wells Fargo…
If you owe money to the bank, you’ll have 60 days to pay off your balance to $0 before the credit line is closed. If you’re able to do this in time, that will minimize the negative impact of your credit score.
The takeaway: learn about what affects your credit and use it to your advantage
With so many variables – different lenders, standards, credit models, financial history, etc. – there’s no “right” answer that’s equally beneficial for everyone. But you do have options when dealing with Wells Fargo closing your service line.
Just make sure you stay on top of it and consult with a professional.
If you’d like to learn more, here are some resources that might be beneficial to you:
The Credit & Debt Library
Our team has put together resources to educate people about finances, credit, debt, and more. There’s a lot to unpack, but you’ll find information that helps you navigate your finances and reach your financial goals.
Take Free Classes & Courses
Our non-profit partner has helped families and individuals manage their finances for decades. They offer free finance education and all you have to do is register for a course.
Money Sensei™: Make Sense of Your Money
If you need additional insights, Money Sensei™ can make intelligent recommendations based on your total debt, purchase behavior, and more. It’s a free automated tool that helps you track your spending, review your credit improvement, and empowers you to make your own financial decisions.
Financial Coaching & Advice
At the end of the day, a financial expert will give you a complete picture of your available options and recommend the best approach. It’s worth it to consider free financial coaching to help you get back on your feet.