topic You have a consumer finance account on your credit report. in General Credit Topics

You have a consumer finance account on your credit report.

Anonymous — Fri, 16 Oct 2015 22:39:21 GMT

Just got a 3 bureau report and saw this as a nagative reason on one of the scores (mortgage version I think). The only non-cc non-mortage/auto/student loan stuff I see is from Dell Financial Services. Is that a consumer finance account?

Re: You have a consumer finance account on your credit report.

Anonymous — Fri, 16 Oct 2015 22:44:09 GMT

@Anonymous wrote:
Just got a 3 bureau report and saw this as a nagative reason on one of the scores (mortgage version I think). The only non-cc non-mortage/auto/student loan stuff I see is from Dell Financial Services. Is that a consumer finance account?

I think they throw that reason just because they want to put something negative if you're not at 850. I have that in one of my reports and I have no accounts that I think are consumer finance.

Re: You have a consumer finance account on your credit report.

Anonymous — Sat, 17 Oct 2015 00:18:13 GMT

I googled Dell Financial Services and they certainly sound like a finance company. And there's a number of places (here on the Forum and elsewhere) that suggest that some or all FICO models view the presence of a finance company account as something can harm your score (though by how much is unclear)

Is your DFS account open or closed? If closed, when did it close?

Re: You have a consumer finance account on your credit report.

CH-7-Mission-Accomplished — Sat, 17 Oct 2015 02:04:56 GMT

DFS is WebBank. I don't think of that as a finance company. Dell Financial Services is the front name.

I have one of their accounts that I IIB'd. I have never gotten that FICO reason, but maybe they haven't had to get down that far since I have a BK, lates, and lots of new accounts!

But Dell is no more a finance company than Comenity store cards or Barclay's Apple card.

Re: You have a consumer finance account on your credit report.

Anonymous — Sat, 17 Oct 2015 03:25:10 GMT

The link that jumped out at the top when I googled DFS was this:

http://www.bloomberg.com/research/stocks/private/snapshot.asp?privcapId=4816323

It describes it as a company that provides financing solutions, typically via revolving and installment loans. (But it's not a bank.) It sounds a lot like what finance companies do who provide financing to people who want to buy furniture at Rooms To Go or big screen TVs at Best Buy.

They don't sound like incredibly predatory loan sharks, but it sounds a bit to me like the same sort of consumers might use them. I.e... I see a shiny computer (TV, etc.), I don't have the money to buy it, so I take out a loan from a company that advertises right at the store.

I'm basing it also what the OP told us. He's received a message stating unequivocably that "You have a consumer finance account on your credit report." He's looked over his report carefully and the only possible thing it could even remotely be is Dell Financial Services, the company that provides financing for shiny new Dells (just like there are companies that do that for Best Buy and RTG and so on).

I am not saying I don't like DFS, or that they are bad, or that people who get loans from them are bad. I am just using Ockham's Razor. The simplest explanation is that the OP is right and that somehow DFS is being tagged by FICO, when it appears on a consumer's report, as a consumer finance company. I am probably overcautious, but it's because of this kind of thing that I always arrange my financing through a full blown bank or major credit card. Because I don't know how other kinds of entities will be viewed.

Curiously, Revelate posted an interesting link earlier today on a different thread that described how insurance companies go out of their way to ding you in their own internal credit scoring systems for things like having finance companies on your report, and even more reputable things like store cards.

Re: You have a consumer finance account on your credit report.

Anonymous — Sat, 17 Oct 2015 17:58:02 GMT

I have that on most of my score versions. It's my Lending Club loan.

Re: You have a consumer finance account on your credit report.

Anonymous — Sat, 17 Oct 2015 18:02:29 GMT

Followup: Lending Club is also WebBank, so Fico definitely considers them a consumer finance company.

Re: You have a consumer finance account on your credit report.

pizza1 — Sun, 18 Oct 2015 22:25:57 GMT

IF it shows on your reports as DFS, FICO will "pick up" the "Financial" part, and tag it. But it it reports on your reports as WebBank, Then I believe FICO sees "bank" instead, and doesn't tag it. My guess is it shows DFS on your reports...am I correct in this assumption?? Or maybe FICO has tagged Webbank...??

Re: You have a consumer finance account on your credit report.

14Fiesta — Mon, 19 Oct 2015 05:54:40 GMT

@pizza1 wrote:
IF it shows on your reports as DFS, FICO will "pick up" the "Financial" part, and tag it. But it it reports on your reports as WebBank, Then I believe FICO sees "bank" instead, and doesn't tag it. My guess is it shows DFS on your reports...am I correct in this assumption?? Or maybe FICO has tagged Webbank...??

I'm not sure on this one, because Discover, for example, reports as "Discover Financial Services", but they are most definitely a bank. Therefore I wouldn't think FICO would ding you based off of the wording "financial" , but maybe I am wrong - I'm not a FICO algorithm programmer lol

Re: You have a consumer finance account on your credit report.

nycplayboy78 — Sat, 09 Apr 2016 11:28:58 GMT

I too had a Lending Club loan that I paid off in 7 months but why is that a NEGATIVE ITEM on one's credit report. CAPTOOL it is always good to see you...Another one of my creditsoulmate buddies...HAHAHAHA

Re: You have a consumer finance account on your credit report.

iv — Sat, 09 Apr 2016 20:56:58 GMT

@14Fiesta wrote:
@pizza1 wrote:
IF it shows on your reports as DFS, FICO will "pick up" the "Financial" part, and tag it. But it it reports on your reports as WebBank, Then I believe FICO sees "bank" instead, and doesn't tag it. My guess is it shows DFS on your reports...am I correct in this assumption?? Or maybe FICO has tagged Webbank...??
I'm not sure on this one, because Discover, for example, reports as "Discover Financial Services", but they are most definitely a bank. Therefore I wouldn't think FICO would ding you based off of the wording "financial" , but maybe I am wrong - I'm not a FICO algorithm programmer lol

Yeah.... it's not necessary to do random substring matching on lenders' names for this purpose. (And Discover currently reports as "Discover Bank" to Equifax but "Discover Financial Services" to Transunion...)

Remember, it's not like just any "Joe Smith LLC" can decide to start sending data to the CRAs out of the blue.

They need to register themselves as data reporters with each CRA - that includes who they are, what their line of business is, etc. So that information is already available to the CRA. (And larger banks will have several different reporting entities for different lines of business.)

Re: You have a consumer finance account on your credit report.

RobertEG — Sat, 09 Apr 2016 23:36:54 GMT

When used in the field of credit scoring, it is used to differentiate between companies who offer consumer loans at bank rates vs riskier, and thus less-favorable, rates.

Major banks are permitted to use/lend deposit accounts as a source of their lending funds. Smaller banks and other lendors develop their soures from riskier bases.

Thus, in general, consumer finance companies, as used in credti scoring, differentiates an account thst was secured at better terms than those of smaller lendors.

Back in the day, many consumers did not have access to major banks, and thus had to rely on smaller local finance companies.

Today, the internet and other electronic banking makes shopping and applying for best rates at all major banks readily available.

Thus, consumers who use riskier, higher interest consumer finance companies are viewed as doing so becauset the cannot obtain better terms.

They have a more negative connotation that is recognized by providing a credit reporting code for their identification.

Re: You have a consumer finance account on your credit report.

Anonymous — Sun, 10 Apr 2016 00:03:28 GMT

@RobertEG wrote:
When used in the field of credit scoring, it is used to differentiate between companies who offer consumer loans at bank rates vs riskier, and thus less-favorable, rates.

Major banks are permitted to use/lend deposit accounts as a source of their lending funds. Smaller banks and other lendors develop their soures from riskier bases.
Thus, in general, consumer finance companies, as used in credti scoring, differentiates an account thst was secured at better terms than those of smaller lendors.

Back in the day, many consumers did not have access to major banks, and thus had to rely on smaller local finance companies.
Today, the internet and other electronic banking makes shopping and applying for best rates at all major banks readily available.
Thus, consumers who use riskier, higher interest consumer finance companies are viewed as doing so becauset the cannot obtain better terms.
They have a more negative connotation that is recognized by providing a credit reporting code for their identification.

The interesting thing about that is that many of the web based lenders - who are coded as finance - offer lower rates than the major banks. My loan with Promise Financial is at 6.2%. No way I could get that rate with a major bank.

Re: You have a consumer finance account on your credit report.

RobertEG — Sun, 10 Apr 2016 00:34:09 GMT

Absolutely!

And it is common for retailers to offer 0% consumer finance loans for promotional periods, which are excerllent deals for a consumer, such as a sx-month interest free offer from Sears for that new refrigerator, when it goes through a CFC.

I totally agree that simple designation of a creditor as a consumer finance company is not representative of bad consumer credit.

However, I have no idea how Fair Isaac views such loans......