topic Re: Is my Installment a Negative Finance Company account? in Understanding FICO® Scoring

Is my Installment a Negative Finance Company account?

Anonymous — Fri, 15 Jun 2007 03:40:26 GMT

I know I should know this, but I don't. How do I differentiate the difference between a negative finance company and a positive finance company on my credit report.

Mine show up as: Installments
------------------------------------------------------
Installment account:
Individual Account
Installment Term - 60 months
Type of loan - (Secured), (auto) or (line of credit).
Remark: (Closed) or (blank).
------------------------------------------------------

How does this differ from a Finance Company account since installments are finance company accounts right?

Would it say *Finance Company* instead of *Installment*?

If it is just a negative code attached to the installments when the loan is opened, how do we know it is lowering the score. What is different on the credit report. Please can someone explain and show me an example. Thank you!

Message Edited by ilovepizza on 06-14-2007 08:40 PM

Re: Is my Installment a Negative Finance Company account?

MidnightVoice — Fri, 15 Jun 2007 12:47:53 GMT

Someone more experienced than I said:

Tuscani wrote:

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.

Also, the slide show that is linked here:

http://ficoforums.myfico.com/fico/board/message?board.id=ficoscoring&thread.id=4709

strongly indicates that the new FICO calculator will be differentiating between Prime and Subprime loans in a lot of areas

Re: Is my Installment a Negative Finance Company account?

Anonymous — Fri, 15 Jun 2007 15:53:01 GMT

Thanks for the reply. I was just worried because some people had their installment account improperly marked as Consumer Finance Company. For example, one person here had an auto loan from Cap1 or Citi (something like that) marked as a Consumer Finance Company loan, when it was a low rate auto loan. I was wondering if there is something to look for in case it is marked as a mistake.

Re: Is my Installment a Negative Finance Company account?

Anonymous — Fri, 15 Jun 2007 16:36:13 GMT

ilovepizza wrote:
I know I should know this, but I don't. How do I differentiate the difference between a negative finance company and a positive finance company on my credit report.

Mine show up as: Installments
------------------------------------------------------
Installment account:
Individual Account
Installment Term - 60 months
Type of loan - (Secured), (auto) or (line of credit).
Remark: (Closed) or (blank).
------------------------------------------------------

How does this differ from a Finance Company account since installments are finance company accounts right?

Would it say *Finance Company* instead of *Installment*?

If it is just a negative code attached to the installments when the loan is opened, how do we know it is lowering the score. What is different on the credit report. Please can someone explain and show me an example. Thank you!

Message Edited by ilovepizza on 06-14-2007 08:40 PM

From my personal experience since I have one on my report that I have paid on time every time for more than a year, all three bureaus view it differently. My TU score is 746 and lists that loan as a positive saying that I have a good collection of different credit. EX score is 731 and lists it as my #1 negative. EQ score is 744 and doesn't list it either way so I don't know how its affecting me.

Re: Is my Installment a Negative Finance Company account?

Anonymous — Fri, 15 Jun 2007 17:09:54 GMT

@Anonymous wrote:
From my personal experience since I have one on my report

What does it look like on your credit report. Does it show up as installment, ect. Does it specifically say Finance Company, and where does it say this. Is there any way you can copy the info from your credit report and remove account numbers and paste it here. I just want to see what a consumer finance company look like on a credit report. I have never seen one. I am under the impression that a consumer finance company looks like a regular installment and the only way to identify it was a score drop? Help! Thank you.

Re: Is my Installment a Negative Finance Company account?

MidnightVoice — Fri, 15 Jun 2007 17:24:09 GMT

ilovepizza wrote:

What does it look like on your credit report. .

My report from my Mortgage refi said "00006 Too many consumer finance company accounts"

My actual credit reports said nothing.

And EQ seemed less worried than the other two

Re: Is my Installment a Negative Finance Company account?

Anonymous — Fri, 15 Jun 2007 17:40:30 GMT

There is no bill board sign alerting me that this will effect my scoring positively or negatively. And while 1 or 2 might not hurt, even help, too many can have the opposite effect. I did learn something. Thanks

Re: Is my Installment a Negative Finance Company account?

MidnightVoice — Fri, 15 Jun 2007 17:47:38 GMT

The Fair Isaac slide show indicates that FICO scoring is, or will be, differentiating between prime and subprime loans for CCs, mortgages and auto loans

The risk factor is about double for the sub primes

Re: Is my Installment a Negative Finance Company account?

chartley3 — Fri, 15 Jun 2007 19:03:28 GMT

And that is complete BS too. Its a new way for the banks to screw us. If someone is paying on time with a mortgage or installment long it should not matter if its subprime or prime. I take this to mean they dont want people to improve their scores or get better rates.

Re: Is my Installment a Negative Finance Company account?

Anonymous — Fri, 15 Jun 2007 21:06:40 GMT

@Anonymous wrote:

@Anonymous wrote:
From my personal experience since I have one on my report

What does it look like on your credit report. Does it show up as installment, ect. Does it specifically say Finance Company, and where does it say this. Is there any way you can copy the info from your credit report and remove account numbers and paste it here. I just want to see what a consumer finance company look like on a credit report. I have never seen one. I am under the impression that a consumer finance company looks like a regular installment and the only way to identify it was a score drop? Help! Thank you.

Sorry I tried copying it but the site said it contained to many characters. I checked true credit and the account was by itself listed under installments. It didn't have the opening balance on it but listed the current balance, said the account was secured by goods, date it was opened, said current and account open and green blocks with payment history

On credit expert which is provided by ex the account was listed first because they list all accounts together by alphabetic order. It had acct status current balance, monthly payment, secured by household goods, loan term and payment history

Re: Is my Installment a Negative Finance Company account?

Anonymous — Fri, 15 Jun 2007 21:25:10 GMT

I don't think the banks are part of this. I don't think they use this to take more money from you, I think they depend on this to limit losses and to be able to offer better rates to less risk customers. However. Many of us SUPER LOW risk people fall under HIGH RISK sometimes. The system is far from perfect. I wonder what would happen to the system if they let us learn more about it. I personally think it would become more accurate because people with options would be able to make better credit decisions. If only those who are forced to apply for high credit loans applied, they could narrow down to fewer people. On the other hand that might make things harder on lower risk people. Then again, people trying to better them selves after being in high risk would have a better chance of getting out by showing more effort which would be reflected if the score system were more open. Bottom line, the public needs to be informed more about how the scoring works if they want to make the scoring more accurate to separate the people that are trying and the people that don't care. Because right now people that don't care are in the same scoring group from people who do care and some better credit risk people fall back because they made the wrong choices (which weren't bad just bad for the score). But who are we, I mean we have a choice which scoring method is used to grade us right. Not really. But we do have an advantage the rest of the world does not. Thats this forum. At least we are teaching each other. I just wish I knew more because I like all of you are working my hardest and that should count for something. But the score doesn't reflect that, only unknown factors that we try to do correctly which sometimes backfires.

Message Edited by ilovepizza on 06-15-2007 02:25 PM

Re: Is my Installment a Negative Finance Company account?

fused — Sun, 17 Jun 2007 06:24:08 GMT

My wife has great FICO scores and has two consumer finance loan TLs on her reports. Does not seem to have much of an impact on her scores because her crs are thick and full of positive TLs. Rest assured we will not buy furniture in the future by way of a loan. We will spread it out over several ccs or pay with CASH.

Re: Is my Installment a Negative Finance Company account?

Anonymous — Sun, 17 Jun 2007 06:40:24 GMT

@fused111 wrote:
Rest assured we will not buy furniture in the future by way of a loan. We will spread it out over several ccs or pay with CASH.

Furniture store loans (if they have their own credit dept). That would fall under a Consumer Finance Company. I still don't understand why it doesn't boost your score positively like a car loan? What if the interest was at 0%? That would be the financially smart choice. Shouldn't that help your score?

I may recommend as a future change, that loans be classified by interest rate not banks for sub vs prime. Because someone taking out a 0% loan must have good credit and someone taking out a 22% loan would be subprime. Who, what, why, when, where doesn't say prime or subprime. Rate does. Hmm. Don't know how they would pull rates from a credit report.

Re: Is my Installment a Negative Finance Company account?

fused — Sun, 17 Jun 2007 07:00:25 GMT

@Anonymous wrote:

@fused111 wrote:
Rest assured we will not buy furniture in the future by way of a loan. We will spread it out over several ccs or pay with CASH.

Furniture store loans (if they have their own credit dept). That would fall under a Consumer Finance Company. I still don't understand why it doesn't boost your score positively like a car loan? What if the interest was at 0%? That would be the financially smart choice. Shouldn't that help your score?

I may recommend as a future change, that loans be classified by interest rate not banks for sub vs prime. Because someone taking out a 0% loan must have good credit and someone taking out a 22% loan would be subprime. Who, what, why, when, where doesn't say prime or subprime. Rate does. Hmm. Don't know how they would pull rates from a credit report.

That is a no go! These types of loans are subprime and FICO does not like them. Just wait in the coming months when the same will apply with subprime cc's. This and the change in AUs is really going to nail consumers with thin credit files who have mostly AU TLs. Ouch!