@PRILEY wrote:
I would understand if I borrowed money but when a major company offers 0% financing to help sell their product,I don't agree, Especialy if it looks bad even after it's paid off.
I only use my Home Depot card thru Citi when I am purchacing something that I can get 0% other wise it 20%+.
FICO / CB's should have a way to seperate a good financial desicion from a strained financial situation. Isn't that what you do FICO ?
Please do your job if you are going to profit from it ! ! !
Hey Priley. So sorry this happened to you. I agree with you: this is the one part of the FICO algorithm that I feel FICO does a terrible job at helping consumers understand (or even letting them know about). Everybody can just intuitively sense that having lots of credit card debt is going to hurt your score, or late payments, or a very short credit history, or opening lots of credit cards. Anyone with common sense can tell, hey this is going to hurt me.
But the "finance company" thing always comes as a surprise to people. They naturally think they are getting a great deal, and that if they are a good scout and make all their payments on time, well that should be GOOD for their score. It's a huge shock when they discover, when a finance company is involved, it is bad for it (or at least partly bad).
Worse still, the damaging record lasts ten years, not seven. That's because it is not officially classified as a negative record (late payment, collection etc.). It's just a regular account, so it stays on your report for ten years after it is closed. I may be mistaken here, but I am pretty sure I am right about that -- happy to be corrected if any of the veterans here know differently.
FICO seems imply, however, that paying off and closing a consumer finance will decrease the harm done as time goes on. And then when it is completely off your report (ten years from now), there will be no harm at all. I believe I have seen this language somewhere:
"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."
Yeah, I know, your account wasn't high-interest, it was zero interest, how were you to know, etc. -- believe me I am on your side.here. But I am relaying this language so that you can see the last sentence, which implies that the damage becomes small after a little while. I wonder whether the creditor would be willing to delete it for you if you agreed to pay it off -- worth asking them about it anyway.
One last thought. You wrote that you'd understand it hurting your score if you had borrowed money. But that's what you did. Any time you sign an agreement where somebody gives you merchadise without you paying for it right that instant (i.e. your bank account immediately going down or by giving them cash) then you are borrowing money. Like I said above, I am 100% on your side in this. But it's important to always be aware any time you are getting something for nothing what that means, and why it could have an effect on your credit score.
