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Yay...Approved for CareCredit

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Anonymous
Not applicable

Re: Yay...Approved for CareCredit

Hi mvv!

 

Yep its "Type of Account" is revolving.  But its KOB code is consumer finance.  Two different animals.

 

So, the revolving aspect of it is helping - but it's consumer finance.  When there's a choice, it's always better to build with a bank or national credit card rather than a consumer finance account.  So that's why I say if I knew what it was, we never would have opened it.

Message 11 of 18
MarineVietVet
Moderator Emeritus

Re: Yay...Approved for CareCredit

 


@Anonymous wrote:

Hi mvv!

 

Yep its "Type of Account" is revolving.  But its KOB code is consumer finance.  Two different animals.

 

So, the revolving aspect of it is helping - but it's consumer finance.  When there's a choice, it's always better to build with a bank or national credit card rather than a consumer finance account.  So that's why I say if I knew what it was, we never would have opened it.


 

 

Does that really make a huge difference? I truly don't know.

 

Well you know what they say "Ignorance is bliss".  Smiley Happy

Message 12 of 18
Anonymous
Not applicable

Re: Yay...Approved for CareCredit

thanks for the info....I'm also curious about why it being coded as a "consumer finance" card is a bad thing.....can someone explain to me the significance of credit cards which are coded as "consumer finance" vs. those that are not(in which case what is their KOB code?)?  I'd like to learn more about KOB coding.

Message 13 of 18
Anonymous
Not applicable

Re: Yay...Approved for CareCredit


urgent_help_needed wrote:....I'm also curious about why it being coded as a "consumer finance" card is a bad thing.....can someone explain to me the significance of credit cards which are coded as "consumer finance" vs. those that are not

Good question.

 

According to John Ulzheimer, a nationally recognized credit expert who “spent many years in the inner sanctums of Fair Isaac and Equifax”, we should not use finance companies under any circumstances.  He claims that having them on your credit report can lower your scores – even if you are paying on time or keep your balances very low. 

 

When you check the FICO codes (I think Hauling bookmarked a copy of them – you can also google them), you will see a FICO code for Consumer Finance Company – that means it’s a ding in the FICO kingdom.

 

Mr. Ulzheimer also notes that consumers who have finance company accounts are statistically higher credit risks than those who don’t.  And that it’s difficult to avoid finance companies.  You really have to read the fine print.

 

(I’m trying to credit his words without quoting – hope I managed to keep that all legal and above board – if I messed that up, I’m sure I’ll hear about it shortly!)

 

Closing consumer finance company accounts lessens their ding, and it does diminish with time after closing.  However, they can impact your scores as long as they are on your report.

 

(Here's a quote re: John.  "If you want the inside scoop on credit scores and bureau reports, John is simply the best."  --Craig Watts,  Fair Isaac Corporation (inventors of the FICO scoring system).)

 

Hope that helps!

Message 14 of 18
Anonymous
Not applicable

Re: Yay...Approved for CareCredit

This might help a bit.  This is "What's Hurting Your Credit" from my myfico.com/12 report:

 

You have a consumer finance account on your credit report.

Consumer finance companies typically grant loans to people with poor credit histories. Their customers often cannot get loans from traditional lending companies such as banks or credit unions. These are often high-interest loans because the consumer finance company is assuming more risk by lending to people with less than perfect credit.

The fact that you have a consumer finance company loan on your credit report means that you represent a higher risk to lenders than someone with no consumer finance loans. Even if this consumer finance account is closed, it will still lower your FICO score. However, its impact on your score will lessen as time passes.

What to do about this: You should try to stay current with all of your payments and avoid opening any new credit accounts that you don't need.

 Only 12% of FICO High Achievers [?] have a consumer finance account. 

 

This used to be my number #2 negative, and has fallen to #3 after closing my consumer finance accounts.

It's interesting that this code is invisible on my myfico.com reports  - even when it showed up in the  #2 spot on myfico.com/12 and my mortgage pull.

And I'm just as happy with my consumer finance company accounts closed.  Still have all my kids and my lovely husband.  And still have daffodils popping up in the yard.  Life goes on. Smiley Wink

 

Message 15 of 18
Anonymous
Not applicable

Re: Yay...Approved for CareCredit


@Anonymous wrote:

urgent_help_needed wrote:....I'm also curious about why it being coded as a "consumer finance" card is a bad thing.....can someone explain to me the significance of credit cards which are coded as "consumer finance" vs. those that are not

Good question.

 

According to John Ulzheimer, a nationally recognized credit expert who “spent many years in the inner sanctums of Fair Isaac and Equifax”, we should not use finance companies under any circumstances.  He claims that having them on your credit report can lower your scores – even if you are paying on time or keep your balances very low. 

 

When you check the FICO codes (I think Hauling bookmarked a copy of them – you can also google them), you will see a FICO code for Consumer Finance Company – that means it’s a ding in the FICO kingdom.

 

Mr. Ulzheimer also notes that consumers who have finance company accounts are statistically higher credit risks than those who don’t.  And that it’s difficult to avoid finance companies.  You really have to read the fine print.

 

(I’m trying to credit his words without quoting – hope I managed to keep that all legal and above board – if I messed that up, I’m sure I’ll hear about it shortly!)

 

Closing consumer finance company accounts lessens their ding, and it does diminish with time after closing.  However, they can impact your scores as long as they are on your report.

 

(Here's a quote re: John.  "If you want the inside scoop on credit scores and bureau reports, John is simply the best."  --Craig Watts,  Fair Isaac Corporation (inventors of the FICO scoring system).)

 

Hope that helps!


 

I realize we have debated this before, but IME I did not have any noticeable impact on my FICO score with CareCredit.  My scores remained in the high 780's and low 790's with Care Credit reporting, and Care Credit was one of my last apps in a long spree.

 

I did not notice any effect that I did not expect related to any new inquiry and account.  I did not notice any effect on score differing from other major bank or CU CC's.  Therefore, I have concluded that if the use of the credit is in fact useful, then any possible small consequence in score is not a factor.

 

IMO, credit and scores are useful for the purpose of obtaining credit and services that you need or want and not that scores are not the end game themselves.

 

Again, this is IMO and IME.  I personally don't listen to the guru's to much.  I watch real world experience and I cannot find anyone who has proof (as in a before and after CR and scores) that shows this mysterious CF score ding.

 

I personally am happy with my CareCredit.  They allow you to make payments to any balance you want.  I have a $14,800 CL and like having a dedicated line of credit for that purpose, especially with the interest free offers up to 24 months.

 

ALSO:  If you don't think you can PIF within the interest free period, they do offer up extended plans up to 60 months at 14.9% fixed.  I know this isn't the best rate in the world, but it is definitely better than the 25% standard rates.

 

Smiley Happy

 

 

Message 16 of 18
Anonymous
Not applicable

Re: Yay...Approved for CareCredit


txjohn wrote:I personally don't listen to the guru's to much.  I watch real world experience 

Well said.  I don't really see it as a debate.  I like to listen to the gurus (especially when they helped develop the FICO scoring system) and look at real world experience as well (one of the greatest benefits of this board).  I would never negate either of them.

 

Our experience is similar to yours.  We did not see a point ding when Care Credit opened.  Edited to add:  Although DH already had a consumer finance company on his report (a Citifinancial 2nd mortgage); and it appears that you have other accounts in the Consumer Finance category already on your report as well.  (Other GEMB cards, including GEMB JCPenneys show up as consumer finance.)  So Care Credit wouldn't have broken any new ground there.

 

And, like Marine, we have never paid them interest.

 

I chose to close my Consumer Finance Companies because of what they are and how FICO views them, and I'm happy.  DH still has Care Credit open with no balance and we're happy.  We'll probably close it within the year, though.

 

I SO respect your experience AND viewpoint (very much!) AND I love hearing from the insiders who helped develop the formula.  It's all good.

I think we're on the exact same page (or at least in the same chapter - okay, maybe at least the same book).  Sharing info rules!

So no matter what your personal viewpoint and choices are re: Consumer Finance Companies, it's always best to be well-informed of all their aspects.  Being a well-informed credit consumer is golden. 

Message 17 of 18
goodgirl-badcredit
Frequent Contributor

Re: Yay...Approved for CareCredit

Well my Care Credit account has posted to my account... But this is what it says on TU

Gemb/Carec

Status as of [?] Date opened [?] Date of last activity [?] Date closed [?] Account number [?] Loan type [?] Credit limit [?] Largest past balance [?] Terms [?] Account Type [?] Account holder [?] Scheduled payment amount [?]
Mar, 2010
Mar, 2010
Not Reported
Not Reported
Not Reported
Not Reported
$4,000
Not Reported
Not Reported
Revolving
Individual
$0

 

Is this ok... I only lost 2 points for the new account.. And on my EQ i didnt lose any


Starting Score: 3/21 EQ 636 TU 669
Current Score: 12/30 EQ 740 TU 712 EX ??? ....
Goal Score: Yay... I reached my goal of 700!!!


Take the FICO Fitness Challenge

Message 18 of 18
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