cancel
Showing results for 
Search instead for 
Did you mean: 

What's a Finance Company

tag
Cotton_Britches
Frequent Contributor

What's a Finance Company

What exactly is the difference between a finance company and a credit card company?

 

 

Why does having finance company accounts on your credit report lower your score?

“Faith is taking the first step even when you don’t see the whole staircase.”
Message 1 of 5
4 REPLIES 4
LIGHTNIN
Senior Contributor

Re: What's a Finance Company

CCC set a higher standard to be approved then a Finance co.

Also a CCC you can have for years.

 

A finance co is a place where you can get fast cash, with any type of credit score good or bad.

They charge loan shark rates and listed on your CR under installments.

Because you get approved for X amount, and when its paid back monthly, you loan it done.

 

I dont believe FICO can recongnize a finance co from another installment loan co.....Tho i maybe wrong.lol

I've had a finance co on my CR for years, but just last month on myfico CR bang it showed up.

I'll know soon if it affects my score, it's about to drop off my  CRSmiley Wink 

FICO's May 2015 EQ764 ~~Live below your means and always keep an emergency fund -Love Everybody ~ Big Kenny ~ Big and Rich ~~~~~Credit Scoring 101 - Common Abbreviations - Freq Req Threads - Free Credit Reports - What Steps Do I Take?DV? PFD?
Message 2 of 5
Jazzzy
Valued Contributor

Re: What's a Finance Company


@LIGHTNIN wrote:

CCC set a higher standard to be approved then a Finance co.

Also a CCC you can have for years.

 

A finance co is a place where you can get fast cash, with any type of credit score good or bad.

They charge loan shark rates and listed on your CR under installments.

Because you get approved for X amount, and when its paid back monthly, you loan it done.

 

I dont believe FICO can recongnize a finance co from another installment loan co.....Tho i maybe wrong.lol

I've had a finance co on my CR for years, but just last month on myfico CR bang it showed up.

I'll know soon if it affects my score, it's about to drop off my  CRSmiley Wink 


Hi LIGHTNIN...someone in the forums...can't remember who...once said that consumer finance companies/accounts are coded differently when they report than credit cards are. Apparently that's how FICO can pick up on them.

 

It's a very confusing area. It's also been said to be careful of the no money down / no interest furniture deals. Apparently they can be coded as consumer finance. It's just too bad that apparently there is no warning up front on some of these that aren't so obvious and don't have "finance" in their name.

Message 3 of 5
codedoctor
Valued Member

Re: What's a Finance Company

One of my three major credit reports (I don't have which one handy at the moment) complains about a "finance company" but the others don't.

 

I've never visited "Friendly Bob Adams" type places (one such used to say "visit friendly Bob Adams"). After research I found that this account was a $16K loan through Wells Fargo that I was given by Trane corporate air conditioning when I had new furnace, air con, etc, installed in my house. No interest, no payments for 12 months. I paid in full on the 11th month. Anyway, this was the "finance company" in my case.

Message 4 of 5
haulingthescoreup
Moderator Emerita

Re: What's a Finance Company


codedoctor wrote:

One of my three major credit reports (I don't have which one handy at the moment) complains about a "finance company" but the others don't.

 

I've never visited "Friendly Bob Adams" type places (one such used to say "visit friendly Bob Adams"). After research I found that this account was a $16K loan through Wells Fargo that I was given by Trane corporate air conditioning when I had new furnace, air con, etc, installed in my house. No interest, no payments for 12 months. I paid in full on the 11th month. Anyway, this was the "finance company" in my case.



This sort of thing happens, although not as much now as in the past. It used to be that furniture store financing and similar deals showed up as "consumer finance accounts", which is a ding on your FICO scores, although a very minor one.

A more typical case is what I have on my reports. I came home from work one day and found a mailer from Wells Fargo Financial, offering a loan for X amount, payable over 3 years. This was back in my deeply ignorant years, and DD#1's college tuition had just taken an unexpected bounce, and so I said, sure, why not? I accepted the offer and paid it off over 10 months instead of 3 years, and everyone was happy. But now that I have fewer negative factors on my reports, "presence of a consumer finance account" is now showing up.

These are supposed to be showing as installment, rather than revolving (CC's.) The lenders have figured this out, so what used to appear as a CFL is now appearing as a CC (Ashley Furniture, etc.) But it's pretty much impossible to tell what might or might not report as a CFL, so I'd advise doing any financing on a straight CC or on a personal loan from a credit union, etc. instead.
* Credit is a wonderful servant, but a terrible master. * Who's the boss --you or your credit?
FICO's: EQ 781 - TU 793 - EX 779 (from PSECU) - Done credit hunting; having fun with credit gardening. - EQ 590 on 5/14/2007
Message 5 of 5
Advertiser Disclosure: The offers that appear on this site are from third party advertisers from whom FICO receives compensation.