Furniture Loan = Charge Account = Revolving Credit

[acleynes]

I could not figure out why my credit score was so high (was 815, now 767).  I have very few credit cards and have a lot of store cards with toy limits.

90% of the time, my credit card utilization was between 40%-50%... or so I thought.

I just joined Credit Karma yesterday.  Credit Karma had grouped what I thought where installment loans, under revolving credit accounts.

My $10K tempurpedic bed, my $20K AICO bedroom/dining set from American Furniture Galleries, and my other loans from Bailey's and Hancock & Moore are not classified installment loans at all, but as "charge accounts". 

My store cards from JC Penny, SEARS, AAFES, Arie, Macy's, etc... are classified as charge accounts too.  So this whole time I thought I had awful credit utilization of between 40%-50%.  In reality, I am at around 15%, because I have been paying off these furniture loans for almost 5 years. 

I can't believe for 5-6 years, I thought the highest credit limit reporting on my credit report was my wife's $8,200 Military Star Card.  I had a $20,000 credit line from American Furniture Galleries this whole time that I thought was an installment loan.

[guiness56]

Have you looked at your reports directly from the CRAs.  That is what I would go by.  CK does things a bit differently, like only using open accounts in AAoA instead of both open and closed.

[acleynes]

Yeah, I checked my last paid for credit report from MyFico from last month, it said it was a charge account too.  I never really took the time to scrutinize my credit report before.  In my mind, a furniture loan was an installment loan.  Because th account balance was one way.

I do not understand why a furniture loan that is set up like an installment loan, is classified under the same pretext as a store card.  I understand that a "store" issued me the loan, but it is not revolving like other store cards.

[guiness56]

I don't mean a 3rd party report, I mean from the CRA themselves.  They tend to have more detailed information.

It depends also on who the lender was.  I believe WF reports as revolving.  I have also seen them being reported as a Consumer Finance Loan which is not good.

I am with you that it should report as an installment loan.

[RobertEG]

When you secured credit from the furniture company, did your agreement set specific monthly payments for a specific term of months?

Or did it deduct monthly payment from the remaining principal, and recompute the interest due each month based on the remaining balance?

Not all revolving credit accounts are charge accounts.  It sounds like you may have a line of credit.

[guiness56]

How is a line of credit reported?

[acleynes]

Credit Karma, Equifax, MyFico, and Transunion, all report as "charge accounts".

I bought my credit report from Equifax and Transunion website directly over month ago and printed it.  They say the same thing.  The payments are just like a car loan.  There is a monthly minimum that never changes, but I can pay extra.

[guiness56]

It should be installment it seems.

[acleynes]

Yep, it definitely says "Charge Account" on MyFico credit report and it also says account type is "revolving".

I do recall the sales person at American Furniture Galleries tell my wife and I that we could buy the rest of the pieces to our bedroom and dining set with our store credit once it was paid off.

So maybe store credit is like a store card, minus the physical card.  That is why it reports like one.

Now that I think about it, I am mad that these furniture loans counted as "revolving credit" all these years.  Because they caused my utilization percentage to be absurdly high the first couple of years.  Now that these furniture loans are almost paid off, I am enjoying better utilization, but I can't help but wonder how much better my credit score would have been in the last 5 years if they had reported as installment loans instead.

[acleynes]

Has anyone else had to borrow money to buy furniture???

How did it report on your credit report?  As an installment or as a revolving account?