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How do zero % accounts report for furniture and such?

Frequent Contributor

Re: How do zero % accounts report for furniture and such?


CreditGuyInDixie wrote:

juniebrunner wrote:

I am interested in this thread because if I am reading this right, when I close on my house, if I go to Rooms To Go and purchase $2500 in furniture, to be financed through them, this $2500 is seen negatively on my credit report?  Because of a 'type' of credit, even AFTER I pay it off in 6 months its going to show negatively on my CR for 7 years?

 

Am I understanding this correctly?


Your understanding is spot on -- except it is a tiny bit worse than what you described.  A finance company account stays on your report for ten years after it is closed, not seven, just like any other account. 

 

Here are the more "encouraging" caveats.

    * Although the RTG purchase you describe sure sounds like it would be flagged by the lender as an FC account, it might not be.  What gets submiitted as an FC account and what doesn't is not always clear. 

    * It is possible that a closed FC account harms you less than an open one.  Possible -- nobody knows.  This sort of thing is very hard to test because the way you test stuff ideally is to add it to your report and then change it back. There's no easy way to get an FC account off your report (aside from wait ten years) and therefore nobody here really wants to experiment with it.  What is certainly clear is that each year people post on this forum asking why FICO just gave them a formal reason code that says their FC account is harming their score.

 

It's best just to avoid anything that sounds like it could later appear on your report as an FC account.  A major credit card that has a 0% intro offer is the clear exception.

 

But even that exception has to be handled very carefully.  Someone recently posted about some tremendous trouble he's in now because he failed to read the fine print of his 0% CC offer carefully enough -- he's now paying a lot of interest and fees.

 

Overwhelmingly my advice when facing a possible 0% offer is to ask yourself why it is tempting you.  There seems to be two common scenarios.  In fact I have never heard of any others.

 

(1)  It is tempting cause I'd really like this $5000 bed, but I do not have the money to pay for it.  In short, I don't want to do the painful work of going without for a while and saving for it.  This should be a red flag -- in my opinion.  This is overwhelmingly why people in this country get into trouble.  They want to buy things they cannot afford.  Basically there are two exceptions: a car and a house.  It's hard to save all the money you need for those before you buy them.  But aside from those, one should IMO move toward a lifestyle where you are regularly spending far less than you make and that all significant purchases are made with savings you already have.

 

(2)  I have the money now, but if I accept the 0% offer I can make some money on the side (e.g. in a high-interest savings account) with my existing cash.  Again, I think it is really important to carefully crunch the numbers and see how much money you come out ahead on.  If we were in the late 70s, when interest rates were extremely high (16%) that would be the smart move hands down.  But when interest rates are extremely low (like now and the last several years) you will make very little money with this.  Banks and CC issuers know this.  They know they are losing almost nothing by this 0% offer and stand to gain quite a lot by inducing you to spend.

 

Again, just my thoughts, and everybody can and should decide for themselves what is best.


Well that just sucks.  I can afford to pay the cash for just about anything I am going to need/want, but really liked the idea of using reserves all at once; instead budgeting for it without using those monies. 

 

Bad enough my credit score will take a hit once the mortgage reports for the first time couple of months past the closing date.

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In second year post 13 DC (12-28-15)
Entered garden 05-19-2017 CLOSED ON MY NEW HOUSE 5/17/17!!!!

Message 21 of 24
Valued Contributor

Re: How do zero % accounts report for furniture and such?


CreditGuyInDixie wrote:

MissingCalifornia wrote:

Currently one is 760's and the other (2) files are 770s and utilization is 1%.

 

I understand I am likely overthinking this but as long of a road it has been to get my scores where they are today I am just wanting to make sure I make sound informed decisions.


Then you will be fine with Jamie's idea.  Your scores will probably take the same hit you'd experience with any new credit card, and then a larger hit if you run the card up to a high util.

 

But the high individual util is a temporary hit, right?  It goes away as you pay the credit card down.

 

Are you planning to buy a house in the next few years?

 

Congrats btw on having such a low CC debt.

 


This is for my existing home which I have the deed to so I am not necessarily looking to buy again in the future (at least not the next 1-2 years).

 

You are correct on the temporary hit, again, I am a bit overprotective and need to relax a bit because once I think this out the best path is mostly clear.

 

Thank you on the low CC debt comment.  It's funny, if I had listened to may parents preaching on finance many years ago just imagine where I could be today if I had done so much sooner.  Sure is funny the older we get the smarter the things our parents said seem spot on.



Message 22 of 24
Valued Contributor

Re: How do zero % accounts report for furniture and such?

I'll repost the post that I did earlier that explains the app spree that my wife and I did after closing on our house this past Friday. Now, keep in mind that neither of us had openened a new credit card in the past 3 years. We were grooming our scpores for the mortgage app.

 

I have plenty of money to pay cash for the furniture but currently have it invested in stocks that are making me a really good return.

 

Here's the original post:

 

We closed on our house today so came home and went on a much needed spree.

 

My cards and limits before the spree:

 

AMEX Zync: $500 Hard Limit

Bank of America Cash Rewards: $8000

Chase Freedom: $1500

Cap1 QS: $13,000

Cap1 secured: $1300

Discover IT: $26,000

Walmart MC: $8000

 

Wife's cards and limits before the spree:

 

AMEX PRG: ????

Chase Freedom: $4,500

Discover: $27,000

Walmart: $2000

Cap1 QS: $10,000

 

We were after 0% APR cards so we could buy new furniture for our new house. Don't get me wrong, we have the money to pay cash for the furniture but if somebody would be willing to lend me money at 0%, why not take it?

 

This is what we did:

 

Wife applied for Discover Miles. 0% APR for 14 months. She was approved for a WHOPPING $3000! Chatted online with CSR and asked if we could transfer some of her Discover IT CL to Discover Miles CL. "Sure, no problem. What do you want to do?" Transferred $17,000 from Discover IT to Discover Miles so the IT card has a CL of $10,000 and the Discover Miles card with a 0% APR now has a credit line of $20,000! Yay Discover!

 

Wife applied for Bank of America Cash Rewards card with a 0% APR for 12 months. Approved for $8000! Yay BoA!

 

Wife applied for Amazon store card for 5% cash back. Approved for $4500. Yay Amazon!

 

I applied for Citi Diamond Preferred that has a 0% APR for 21 months. Was approved for a WHOPPING $5000. Booo Citi! Called CSR and told him that I was expecting a much higher limit. CSR said, "I'm sorry, we can't change the limit once it is approved." Undeterred, I called the executive offices and talked with someone there. They stated that they needed to do another HP to see if they could increase the starting CL. I gave them the okay to do the HP and they said I would receive the results in the mail in 7 to 10 days. He said that it would probably be about the same time that I received the card. So...At least $5000 but maybe more...To be determined...

 

I applied for an AMEX BCE that has 0% APR for 12 months. Tried to app online but was having trouble. Every time I would press the "Apply Now" button the screen would just keep recycling. It wouldn't take me to the app page. Tried 2 different browsers with the same results. Called a CSR on the phone and did the app over the phone. Approved for $21,000. Yay AMEX!

 

I applied for the Amazon store card and was approved for $1900. Booo Amazon. But I'll live with it for now.

 

So...All in all a very successful spree IMHO.


Starting Score: EQ 653 6/21/12
Current Score: EQ 703 8/5/17 - EX 743 8/5/17 - TU 731 8/5/17
Message 23 of 24
Highlighted
Frequent Contributor

Re: How do zero % accounts report for furniture and such?


jamie123 wrote:

I'll repost the post that I did earlier that explains the app spree that my wife and I did after closing on our house this past Friday. Now, keep in mind that neither of us had openened a new credit card in the past 3 years. We were grooming our scpores for the mortgage app.

 

I have plenty of money to pay cash for the furniture but currently have it invested in stocks that are making me a really good return.

 

Here's the original post:

 

We closed on our house today so came home and went on a much needed spree.

 

My cards and limits before the spree:

 

AMEX Zync: $500 Hard Limit

Bank of America Cash Rewards: $8000

Chase Freedom: $1500

Cap1 QS: $13,000

Cap1 secured: $1300

Discover IT: $26,000

Walmart MC: $8000

 

Wife's cards and limits before the spree:

 

AMEX PRG: ????

Chase Freedom: $4,500

Discover: $27,000

Walmart: $2000

Cap1 QS: $10,000

 

We were after 0% APR cards so we could buy new furniture for our new house. Don't get me wrong, we have the money to pay cash for the furniture but if somebody would be willing to lend me money at 0%, why not take it?

 

This is what we did:

 

Wife applied for Discover Miles. 0% APR for 14 months. She was approved for a WHOPPING $3000! Chatted online with CSR and asked if we could transfer some of her Discover IT CL to Discover Miles CL. "Sure, no problem. What do you want to do?" Transferred $17,000 from Discover IT to Discover Miles so the IT card has a CL of $10,000 and the Discover Miles card with a 0% APR now has a credit line of $20,000! Yay Discover!

 

Wife applied for Bank of America Cash Rewards card with a 0% APR for 12 months. Approved for $8000! Yay BoA!

 

Wife applied for Amazon store card for 5% cash back. Approved for $4500. Yay Amazon!

 

I applied for Citi Diamond Preferred that has a 0% APR for 21 months. Was approved for a WHOPPING $5000. Booo Citi! Called CSR and told him that I was expecting a much higher limit. CSR said, "I'm sorry, we can't change the limit once it is approved." Undeterred, I called the executive offices and talked with someone there. They stated that they needed to do another HP to see if they could increase the starting CL. I gave them the okay to do the HP and they said I would receive the results in the mail in 7 to 10 days. He said that it would probably be about the same time that I received the card. So...At least $5000 but maybe more...To be determined...

 

I applied for an AMEX BCE that has 0% APR for 12 months. Tried to app online but was having trouble. Every time I would press the "Apply Now" button the screen would just keep recycling. It wouldn't take me to the app page. Tried 2 different browsers with the same results. Called a CSR on the phone and did the app over the phone. Approved for $21,000. Yay AMEX!

 

I applied for the Amazon store card and was approved for $1900. Booo Amazon. But I'll live with it for now.

 

So...All in all a very successful spree IMHO.


So what I should do after mortgage funds, is app for 0% cards instead of going with a furniture place financing.  Good to know!

align="right">
In second year post 13 DC (12-28-15)
Entered garden 05-19-2017 CLOSED ON MY NEW HOUSE 5/17/17!!!!

Message 24 of 24