More about consumer finance companies

[BabyBlue]

Sorry, I know this topic has been discussed a lot, but I guess I am still confused about it. Is everything that has "finance" in name REALLY consider as subprime consumer finance? I have a car loan through Southeast Toyota Finance that is being reported on my credit report as World Omni Financial Corp. - is that considered consumer finance? I obtained financing through the dealership and since the offer was really good I did not even look anywhere else.

Also, my significant other has got several TLs through consumer finance companies (closed car loan through CitiFinancial, paid Wells Fargo Financial/Mattress Firm revolving account and a currently open account with Dell - I think it is backed by CIT, which is also considered a consumer finance co.). His scores are 750+ w/ an 8 year old bankruptcy. He may also have had additional consumer finance accounts that were included in the bankruptcy, but those should have fallen off his report by now.  What could be the dinge in his credit score for CF TLs?  

I guess I did not realize that having consumer finance accounts may lower scores. I will be smarter from now on - no more store deals if we do not really need them and can apply for credit elsewhere if we do!

[haulingthescoreup]

The comments that you see about "finance" in the name are a desperate attempt to try to figure out ahead of time what will show up as a CFL.

The car loan shouldn't be treated as a CFL. I have a paid lease from Honda Financing, and it shows (as best as I can tell) as an auto loan/ lease.

You mainly have to watch out for CFL's when you're getting an unsecured personal loan from one of the store-front lenders like CitiFinancial, Wells Fargo Finance, and so forth, typically high-interest. It gets really tricky when you start looking at furniture store financing and so forth. Many of these now report as revolving instead, dodging the CFL bullet.

Not terribly helpful, I know.

Since it's so hard to tell, you generally will do better to get a signature loan from your local CU or bank. These should report as a straight installment loan.

[BabyBlue]

Thanks, HTSU, for your response. It was helpful even though not all my questions were answered

To the best of my knowledge none of the TLs I mentioned in my previous post are reported as "consumer finance" accounts - Dell/CIT - revolving; Wells Fargo Financial/Mattress Firm - revolving; and the two car loans as installment loans. If that is the case, then none of them should hurt the credit file, right?

I do not think my DH has ever gotten a message that a consumer finance account is hurting his score (but we have not checked his credit scores in a while). That's why I never suspected they could be considered derogatory. 

That's funny that you mentioned furniture stores - I now think it was a blessing; 3 years ago my scores were in low 700s and I had only two TLs (Visa cards from WaMu and BOA) . It was shortly after I moved to the U.S. from Europe - I wanted to build my credit history and I applied for financing w/ a local furniture store. American General Finance rejected me stating that I did not have enough TLs in my file. Now I can thank them for that.

I will be more careful from now on and avoid CF TLs as a plague.

[haulingthescoreup]

It does look as though you've probably dodged the CFL bullet.

FWIW, many of those who get this as a negative on their reports only do so when nearly everything else is clean and sparkly, and the scoring formula is scraping the bottom for things to criticize.

I'm still not sure how the furniture store deals get away with being called "revolving", unless it's because one doesn't have a set monthly payment, as one did in my newly-wed days. Back then, they were definitely installment, mail a check for the same amount every month. It seems now as it a lot of them allow the postponing of payments to some degree, so I guess that's what did the magic.