CNBC reports that Wells Fargo is closing personal lines of credit and no longer offering the product to consumers. In a letter sent to their clients, they state that the closure may impact their credit scores. In my opinion, this really stinks!
If someone has a balance and the lender closes the account, it could be damaging to their credit scores. It’s really not fair when the consumer has done nothing to trigger the account to be closed – it’s simple a decision that the bank (Wells Fargo, in this case) has made. It doesn’t matter if the consumer has made their payments on time or how established the account is, it will most likely cause scores to drop until the debt is paid off.
One option one could take to potentially reduce credit score hit would be to pay off the debt now. This will eliminate having a balance reported on having a “closed” debt with a balance due against your credit. Reportedly, the credit lines being closed by Wells Fargo go up to $100,000.
Homeowners in this situation could look at refinancing to pay off the credit line. This may be an attractive options with how low mortgage rates are currently and how much homes have appreciated. I hope that if you have a credit line that is being closed by a bank that you DO NOT use that bank for a refinance.
If your home is located anywhere in Washington state, I’m happy to review your scenario to see if refinancing makes sense for you. Click here for a no-hassle mortgage rate quote.