Nick was shocked to receive an email from ING telling him that his Electric Orange checking account would be closed because of his credit score. Nick was not the only one; similar letters were sent to 5,300 account holders.

MSN Money columnist Liz Weston contacted an ING spokesman who said, “The letter was worded wrong,” and that ING does not “give or deny” checking accounts based on credit scores.

What the bank does use credit scores for is to help determine the size of a customer’s overdraft line of credit. Instead of charging $35 a pop for overdrafts, as many other banks do, the Electric Orange allows customers to use this credit to prevent overdrafts; the customer pays a nominal amount of interest for the privilege.

ING’s email, after the jump…

(Photo: wili_hybrid)

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Based on your credit score, which was provided by a consumer-reporting agency, we have decided to close your account. We have reduced your Overdraft Line of Credit to zero ($0). We feel this action is in your best interest as well as ours.

Because we want to make sure you have time to manage the transition of your account, we will leave the deposit portion of your account open for the next 30 days. Please use that time to:

* Change any direct deposits you currently have scheduled for your Electric Orange.
* Update any bill payments that are currently set up for your Electric Orange.
* Repay any outstanding balance you might have on the Overdraft Line of Credit.
* Allow any pending transactions to clear.

After 30 days, you will not be able to use your Electric Orange – it will be restricted from all account activity. This means you will not be able to transfer funds in to or out of your Electric Orange or use your MasterCard

debit card.

Any account balance plus any interest earned on your Electric Orange will be transferred back to your external, linked checking account five business days later. However, if we know of transactions that have not cleared within those five days, we will wait to transfer funds until those transactions have been processed.

Please keep in mind, that while information from a consumer-reporting agency in whole or in part influenced our decision, the reporting agency did not make this decision and cannot provide information about it. However, if you have any specific questions regarding your credit report, you can contact that agency directly using the following information:

Equifax
Consumer Services
Atlanta, GA 30374-0241
1-800-685-1111
http://www.equifax.com

Under section 612 of the Fair Credit Reporting Act, you have a right to obtain a free copy of your credit information on file at the agency, if your request is made within 60 days of receiving this notice. Under Section 611 of the Act, you also have the right to dispute the accuracy or completeness of any information contained in that report.

Please note this does not affect any other accounts you may have with ING DIRECT. In addition, you are welcome to re-apply for another Electric Orange again in 30 days. If you have any questions, you can give us a call at 1-888-464-0727 from 8 AM to 8 PM any day of the week.

Thank you.

Anyone concerned about the status of their account should contact ING. — CAREY GREENBERG-BERGER

ING Direct credit score goof [Ask Liz Weston]

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