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How do zero % accounts report for furniture and such?

Community Leader
Senior Contributor

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

I imagine that it reduces the chance, though I could not personally be certain that even some big banks don't have a spinoff CF division or otherwise sell CF products.

 

Here's a question though... if you really are finding the 0% thing appealing, what's wrong with Jamie's idea?  You'll end up with a no annual fee credit card (assuming you chose a no AF option) that you can then keep open for another 30 years at no cost.  The 0% installment account will end up dropping off your report in 11-12 years at which point you'll lose its 11 years of age.

 

Regardless I do encourage you to carefully work through the math on this.  You have the money for the purchase now.  What do you plan to do with that cash instead if you do not use it to buy furniture?  Keep it in a high yield savings account... at 1%?

Message 11 of 24
Senior Contributor

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


MissingCalifornia wrote:


Curious question for those that can clarify.  I have confirmed that the furniture company I am looking to buy from uses Wells Fargo for its 0% deal.  Would this possibly help to make sure it is not flagged as an FC account/trade?


Same exact situation I was in here... I scored furniture through Bob's Discount Furniture and they used Wells Fargo Financial for their 0% 12-18 month offer, whatever it was.

 

I don't recall if I ever received a physical card from them.  If I did, I destroyed it.  I did the same thing with applicances through Sears almost 10 years ago... I used their special in house financing and if they sent me a card I destroyed it as well.  2+ years ago I didn't pay nearly as much attention to my credit, so I honestly don't remember.

Message 12 of 24
Valued Contributor

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

Before you buy consider good used.  Not appliances or mattress/springs.  There is in my area a furniture store that buys furniture from people being evicted and foreclosed and resells it cheap.  I bought a $500 table for my family room for $100 and it looks new.  I had shopped for the same one new before I found it used. 

Message 13 of 24
Valued Contributor

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


CreditGuyInDixie wrote:

I imagine that it reduces the chance, though I could not personally be certain that even some big banks don't have a spinoff CF division or otherwise sell CF products.

 

Here's a question though... if you really are finding the 0% thing appealing, what's wrong with Jamie's idea?  You'll end up with a no annual fee credit card (assuming you chose a no AF option) that you can then keep open for another 30 years at no cost.  The 0% installment account will end up dropping off your report in 11-12 years at which point you'll lose its 11 years of age.

 

Regardless I do encourage you to carefully work through the math on this.  You have the money for the purchase now.  What do you plan to do with that cash instead if you do not use it to buy furniture?  Keep it in a high yield savings account... at 1%?


I am not against Jamies idea and looking at that now.  My question regarding a 0% card is how do my existing creditors view a new CC being opened and utilization on that account could be as high as 90% initially?  I am not dismissing it for sure but am curious on that particular question.



Message 14 of 24
Valued Contributor

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


MissingCalifornia wrote:

 

I am not against Jamies idea and looking at that now.  My question regarding a 0% card is how do my existing creditors view a new CC being opened and utilization on that account could be as high as 90% initially?  I am not dismissing it for sure but am curious on that particular question.


I'm curious about this too. Because doesn't the store give you a 'line of credit' essentially? So why is it automatically 90-100% utilization? Do they only give based on what you're buying? E.g. you spend $2,000, you get a $2,000 line?

 

Otherwise you open a new cc and get a $2k balance and you're maxed. I would venture a guess that people with 5 figure credit lines are less likely to finance through the typical furniture/appliance store. 

11/2017: EX 704 | TU 720 | EQ 672 -- Starting (2/2016): 630 | 620 | 580 -- INQs: 17 | 26 | 28 (last 6 months: 5 | 2 | 6)
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Message 15 of 24
Community Leader
Senior Contributor

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


MissingCalifornia wrote:

CreditGuyInDixie wrote:

I imagine that it reduces the chance, though I could not personally be certain that even some big banks don't have a spinoff CF division or otherwise sell CF products.

 

Here's a question though... if you really are finding the 0% thing appealing, what's wrong with Jamie's idea?  You'll end up with a no annual fee credit card (assuming you chose a no AF option) that you can then keep open for another 30 years at no cost.  The 0% installment account will end up dropping off your report in 11-12 years at which point you'll lose its 11 years of age.

 

Regardless I do encourage you to carefully work through the math on this.  You have the money for the purchase now.  What do you plan to do with that cash instead if you do not use it to buy furniture?  Keep it in a high yield savings account... at 1%?


I am not against Jamies idea and looking at that now.  My question regarding a 0% card is how do my existing creditors view a new CC being opened and utilization on that account could be as high as 90% initially?  I am not dismissing it for sure but am curious on that particular question.


Great question.  We can answer that better if you tell us what your FICO 8 scores are now, what your total utilization is now, and what your total utilization would be after you placed a lot on a new card.

 

When a person with shaky credit and/or already existing sizable CC utilization maxxes out a new card, that might be seen as a problem by creditors.  But if your scores are very sound and your current util is low, you would almost certainly be fine.

 

Note also that you don't have to bring the new card up to a 90% level.  You could bring it up to 79% (say) and pay the balance of the furnitiure expense with cash.

 

PS.  When I say "pay with cash" I am assuming really that you will be paying all the cost with credit cards, just so that you can maximize your rewards, and then paying off the cards promptly.

Message 16 of 24
Frequent Contributor

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

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?

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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 17 of 24
Valued Contributor

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


CreditGuyInDixie wrote:

MissingCalifornia wrote:

CreditGuyInDixie wrote:

I imagine that it reduces the chance, though I could not personally be certain that even some big banks don't have a spinoff CF division or otherwise sell CF products.

 

Here's a question though... if you really are finding the 0% thing appealing, what's wrong with Jamie's idea?  You'll end up with a no annual fee credit card (assuming you chose a no AF option) that you can then keep open for another 30 years at no cost.  The 0% installment account will end up dropping off your report in 11-12 years at which point you'll lose its 11 years of age.

 

Regardless I do encourage you to carefully work through the math on this.  You have the money for the purchase now.  What do you plan to do with that cash instead if you do not use it to buy furniture?  Keep it in a high yield savings account... at 1%?


I am not against Jamies idea and looking at that now.  My question regarding a 0% card is how do my existing creditors view a new CC being opened and utilization on that account could be as high as 90% initially?  I am not dismissing it for sure but am curious on that particular question.


Great question.  We can answer that better if you tell us what your FICO 8 scores are now, what your total utilization is now, and what your total utilization would be after you placed a lot on a new card.

 

When a person with shaky credit and/or already existing sizable CC utilization maxxes out a new card, that might be seen as a problem by creditors.  But if your scores are very sound and your current util is low, you would almost certainly be fine.

 

Note also that you don't have to bring the new card up to a 90% level.  You could bring it up to 79% (say) and pay the balance of the furnitiure expense with cash.

 

PS.  When I say "pay with cash" I am assuming really that you will be paying all the cost with credit cards, just so that you can maximize your rewards, and then paying off the cards promptly.


 

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.



Message 18 of 24
Community Leader
Senior Contributor

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


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.

Message 19 of 24
Community Leader
Senior Contributor

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


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.

 

Message 20 of 24