Understanding FICO® Scoring

[iluvdodgetrx]

I visited a furniture store lately that affers 0% for 12 months thru Wells Fargo. They thought I was crazy when I told him that in my experience it could hurt a good score to go through a secondary finance company. He said that in 38 years he has never heard that but could not tell me if Wells Fargo was a finance company. Does anyone know if Wells Fargo is a finace company??

[MarineVietVet]

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iluvdodgetrx wrote:

I visited a furniture store lately that affers 0% for 12 months thru Wells Fargo. They thought I was crazy when I told him that in my experience it could hurt a good score to go through a secondary finance company. He said that in 38 years he has never heard that but could not tell me if Wells Fargo was a finance company. Does anyone know if Wells Fargo is a finace company??

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I looked through some older posts and found that Wells Fargo Financial is a CFL but not Wells Fargo. There is a difference in the two. Just make sure they were talking about Wells Fargo Financial.

From a BK years ago to:
EX - 9/09 pulled by lender 802
EQ - 7/06-663, 3/10-800
TU - 8/10-772
You can do the same thing with hard work

[iluvdodgetrx]

What is CFL? Sorry. I dont know all the abbreveations.

[MarineVietVet]

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iluvdodgetrx wrote:

What is CFL? Sorry. I dont know all the abbreveations.

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CFL= Consumer Finance Loan.

Abbreviations used around here.

From a BK years ago to:
EX - 9/09 pulled by lender 802
EQ - 7/06-663, 3/10-800
TU - 8/10-772
You can do the same thing with hard work

[laz98]

we have a jewelry account with a local jeweler that uses wells fargo financial for their 0% for 5 years promotions.  it reports as revolving.

[AndySoCal]

This could be reported as a consumer finance loan to the credit brueaus. This could possibly cause a ding on your credit report  with FICO score reason 6 depending on the rest of our credit history. The reason is

Too many consumer finance company accounts

Looked around and did not find the number that makes it too many.

Below is link to an article on the subject on why its is a possible ding.

http://www.debtorsunite.com/Articles/Credit-Scoring/Too-Many-Consumer-Finance-Company-Accounts.aspx

That said you need to make the decision that best fits your financial needs.  The FICO score would be a secondary concern.

[haulingthescoreup]

I recently pulled a /12 FICO report (the one that shows all four negatives, no positives, and none of the other useful myFICO report tidbits) for my TU score.

I was completely thrilled to finally get a negative for "too many CFL's." I have a total of one, and it's from Wells Fargo Financial, courtesy of an offer that came in the mail when DD#1's tuition had suddenly skyrocketed and I'd loaded up a CC to pay for it.

It was 3rd or 4th on the list of negatives; can't remember for sure.

The first negative was high util, with a 0% revolving util. With no CC debt, TU98 started looking at my HELOC balance. TU98 scores this as revolving-ish, but EQ and EX don't (if the CL is high enough), and TU04 doesn't either.

Anyway, if the presence of a CFL is listed as a negative this far down on a 793 score, it means that yeah, they look at one CFL, but no, it doesn't carry much weight. And it still doesn't show on my EQ list of negatives, where EQ has an additional account with lates.

The frustrating thing about CFL's is that there is nothing on your credit reports that indicates for sure that something is a CFL. The scoring formula, and lenders I guess, can see it, but we can't. Look for something that reports as installment and that has the word "financial" in its name. Even then, it's not a dead cert. For instance, I have an old auto lease from Honda, and it's installment, and the lender is Honda Financial, but it's not a CFL. CFL's tend to lean more toward loan offers that come in the mail (where I got mine) and store-front OMG loans and in-store financing deals.

When it comes to CFL's, my advice is to avoid installment financing for furniture, signature loans, etc, if you can. But many of these stores now report these loans as revolving, as if you were going to pay off the sofa and loveseat and then go back for a dining room set, I guess. If it reports as revolving, it's like any other revolving/ CC account. Good luck trying to find out for sure in the store how it will report.

Again, if it shows as installment, you're probably gonna get dinged for a CFL. But it's a tiny, tiny little ding, not worth losing sleep over if you have one.

[MattH]

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iluvdodgetrx wrote:

I visited a furniture store lately that affers 0% for 12 months thru Wells Fargo. They thought I was crazy when I told him that in my experience it could hurt a good score to go through a secondary finance company. He said that in 38 years he has never heard that but could not tell me if Wells Fargo was a finance company. Does anyone know if Wells Fargo is a finance company??

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As others have said, Wells Fargo without the keyword "Financial" in the name is a prime lender, while Wells Fargo Financial is a consumer finance company and may therefore be a minor ding on your FICO score.  However, if this is your only consumer finance company and the rest of your profile is positive then it will be a very minor ding.  When my wife and I bought our current residence we put nearly all our savings into the down payment, so when the A/C died the next summer we had to finance it through CitiFinancial which is Citibank's equivalent of WF Financial and my FICO score was still in the upper 700s because the Consumer Finance Loan was my only negative.  By the time the furnace died a few years later we had paid off the A/C loan and saved enough to write a check for the new furnace.

But do read the fine print closely, and be absolutely certain you make every payment well ahead of time: many of these "0% for 12 months" deals have a catch: fine print that says if you are 10 seconds late on a single payment then you will pay interest (possibly at a rather steep APR).  They figure amany customers will be a little bit late at some time during those 12 months, or maybe once the Postal Service will be a little slow to deliver a check, or something.