How can finance loans actually "hurt your score"?

[Anonymous]

I don't even know exactly what the difference between a finance loan and an installment loan is but regardless of that difference it makes no sense that if I make my payments and get the balance down it wouldn't help my score. Obviously any loan will hurt in the beginning. I wanted to take a Prosper loan (I understand its a finance loan whatever that means) to square up an old tax issue but I don't want a loan that will hurt even as I continue to make my payments. 

[1768geme]

Prosper is a installment  loan and  reports as one  not a finance loan

[taxi818]

you are talking about consumer finance loans. not just any finance loan. like auto loan from finance company. those are loans. like from furniture stores. and others. like AArons. and so on . the reason they hurt your score. is because. of the fico scoring system. as fico looks at reports with those kind of loans as HIGH RISK BARROWERS>

hence you credit will suffer from it. as fico is all designed to determine risk to lenders. hence if you got CFL. consumer finance loan on report. your score will be dinged properly. its just that simple whether you like it or not. hope that answers your question.

[pizza1]

Can a consumer finance loan that shows on my reports as paid/ never late/ in good standing /$0 bal- closed hurt my score with Fico?? I have one showing from One Main Financial. Should I get that deleted?

[MarineVietVet]

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@pizza1 wrote:

Can a consumer finance loan that shows on my reports as paid/ never late/ in good standing /$0 bal- closed hurt my score with Fico?? I have one showing from One Main Financial. Should I get that deleted?

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The consumer finance loan concerns are way over rated as far as I'm concerned. Yes it might make a few points difference but not enough to worry about IMO. FICO looks much more closely at payment history and revolving utilization.

You say that account was closed in good standing? Then I would leave it alone. It will continue to help your credit length history and AAoA as long as it reports.

[taxi818]

I agree with the mod. Overrated worries on that. I'm not staying awake thinking about the few points I lose. So I would not sweat it. I would not delete any positive trade line. Even from a loan shark if I paid him back.

[Anonymous]

I see. Well I was approved for the loan from prosper. Or at least I think I was. The loan funded and I sent the documents in that they asked for today but who knows. They still haven't done the hard pull. 

[taxi818]

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@Anonymous wrote:

I see. Well I was approved for the loan from prosper. Or at least I think I was. The loan funded and I sent the documents in that they asked for today but who knows. They still haven't done the hard pull. 

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I don't think prosper is the kind of loan he's talking about. It will say consumer finance loan on report. Not installment or personal loan. Like if store says. No credit check. Get your furniture now. That is consumer finance loan. 

[Anonymous]

Yes I see that prosper is not that kind of loan now. Someone on another forum referred to them as one. That's why I thought they were

[creditlady]

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@MarineVietVet wrote:

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@pizza1 wrote:

Can a consumer finance loan that shows on my reports as paid/ never late/ in good standing /$0 bal- closed hurt my score with Fico?? I have one showing from One Main Financial. Should I get that deleted?

---

The consumer finance loan concerns are way over rated as far as I'm concerned. Yes it might make a few points difference but not enough to worry about IMO. FICO looks much more closely at payment history and revolving utilization.

You say that account was closed in good standing? Then I would leave it alone. It will continue to help your credit length history and AAoA as long as it reports.

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I beg to differ. I had asignature loan manual review by an underwriter at a bank denied because I had a consumer finance loan. 

I was told to reapply 6 months after the loan was paid off.