Re: Consumer Finance Companies
12-15-2009 03:47 AM
I'm sure this is an accurate statement about lenders' view of "consumer finance companies" ...
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.
... but I think a lot of people get into loans of this type for reasons other than having poor credit histories. CFCs are also commonly the lenders that contract with small retailers for the "no interest until 2020!" type promotions. Big companies have their own credit operations for this purpose, but smaller ones often don't. So you might easily be able to pay for that monster TV or cushy couch on your regular CC, but take the no-interest offer anyway, on the theory that if you can borrow money at no interest, you should. That was my attitude at one time. And if you don't read the paperwork carefully (which you should, of course) or think about what you're doing (ditto), you could easily find yourself in a CFC loan.
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