Credit score

Senator Elizabeth Warren slams bank for possible impact on customers’ credit ratings

U.S. Senator Elizabeth Warren (D-MA) questions Charles P. Rettig, Commissioner of the Internal Revenue Service, during the Senate Finance Committee hearing on The IRS Fiscal Year 2022 Budget, in the office building of the Senate Dirksen in Washington, DC on June 8, 2021.

tom williams | Swimming pool | Reuters

Wells Fargo’s decision to withdraw lines of credit from customers has been lambasted by Senator Elizabeth Warren.

The bank informed customers that their personal lines of credit would be closed, a move that could potentially hurt their credit scores, CNBC reported Thursday.

“Not a single customer should see their credit score suffer just because their bank is restructuring after years of scams and incompetence,” said Warren, a Democrat from Massachusetts. tweeted Thursday evening. “Sending a warning just isn’t good enough – Wells Fargo needs to rectify that.”

It was the latest controversy to plague Wells Fargo since its fake accounts scandal emerged in 2016. Bank workers were found to have improperly created millions of useless accounts to meet sales targets. aggressive. The Federal Reserve took the unusual step of restricting the bank’s balance sheet in 2018, a restriction that forced it to avoid deposits and cut revenue.

Wells Fargo did not respond to a request to respond to Warren’s comments.

The bank also did not respond to emailed questions about why customers’ credit scores would be affected. However, by reducing the amount of credit a customer has, closures could increase their use of credit ratios. This means that borrowers would use a larger percentage of their available credit, which could negatively impact their scores.

Wells Fargo told customers it made the decision to scrap the lines, which ranged from $3,000 to $100,000 in revolving credit, to focus on its credit cards and personal loans. On Thursday, after the CNBC article was published, the bank released this statement:

“We realize change can be inconvenient, particularly where customer credit may be affected,” bank spokesman Manny Venegas said in an email. “We provide 60 days’ notice with a series of reminders before closing, and we are committed to helping every customer find a credit solution that’s right for them.”

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