PhotoWhat if you are one of the two million Wells Fargo customers who recently discovered that the bank opened a fraudulent bank or credit card account in your name?

If so, you're probably angry, since you didn't ask for the card. So you'll show them – you'll close the account.

But not so fast. Closing a credit card account, even one opened in your name without your permission, can negatively impact your credit score. So you might not want to act until you are able to figure out what the damage will be.

Diane Moogalian, Vice President, Customer Operations at Equifax, one of the three main credit agencies, says closing a credit card account that has no balance will reduce the amount of credit at your disposal. Often, she says, that can be a mark against you.

“Lenders and creditors want to see that a consumer is able to make a financial commitment and honor it – over time," Moogalian told ConsumerAffairs. “In other words, that ability to show responsibility can take time, and sometimes keeping an account open can be a good thing.”

But if you don't want the credit card, you will probably suffer less of a hit by closing it if the card has a low credit limit. Chances are, most of the fraudulent accounts have low credit limits. By closing it, you aren't reducing your credit availability that much.

Is it costing you money?

Moogalian says a consumer may also want to consider closing an account that has no balance if that account is costing money. The trade off between spending unnecessary money and having your credit score go down temporarily should go in favor of not spending money needlessly.

How much will closing a credit card account affect your credit score? It depends on how much credit you have, how much you've used, and how good your credit is.

If you have a total credit limit of $20,000 on all your cards but only have balances totaling $4,000, you have a low credit utilization rate and closing an account that reduces your limit by only $1,000 or so won't make a lot of difference, especially if you already have a pretty good credit score.

And if you do have a good credit score, the hit you take for closing your Wells Fargo account should be fairly small and short-lived. By continuing to pay all your bills on time and not opening new credit lines for a while, your score should quickly recover.


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