topic Re: Paid Dell DFS Loan, leave CL open or not? in General Credit Topics

Paid Dell DFS Loan, leave CL open or not?

bourgogne — Sat, 08 Oct 2016 19:47:48 GMT

Hi there,

I got a dell dfs 1 year no % loan in 12/15 and just paid of the remaining $ 230. It has a cl of 2K which I would imagine they will keep open unless I close it completely. So that is my query, from a reporting standpoint it is better to leave it open or close it completely. See below for the original thread. What a bone head move, if I knew about this place I would have never gotten the loan. Lesson learned. Mucho Thanks!

http://ficoforums.myfico.com/t5/Credit-Cards/DFS-WEBBANK-52/m-p/4574085#M1322472

Re: Paid Dell DFS Loan, leave CL open or not?

Anonymous — Sun, 09 Oct 2016 02:51:05 GMT

You were not a bonehead. It's an obscure, even arcane, piece of FICO lore, that certain kinds of accounts are harmful to your score. (Namely "finance company" accounts, like where you buy a computer at Dell or a fridge at Best Buy or bedroom suite at Rooms To Go.)

Very few people know this. What really bites is that, as I understand it, you were trying to do what FICO suggests! Namely, to broaden your credit mix to include a diversity of account types. It's a scandal in my view that myFICO doesn't clear state in the Learn About Scores section that finance company accounts will be considered negatively by FICO.

Anyway, bottom line is that you have the account now. What you need to know is what to do with it -- right?

The good news is that Dell (or the FC) does have the power to delete this record from your credit reports. They may not do it, but all creditors have that ability (to remove one of their accounts). This is the same principle that is behind people who get collections deleted. It's called "Pay For Delete." Some companies won't do it, but they do have the ability to do it.

See if you can find a rep with the company managing the account who will be willing to arrange a PFD arrangement. (You promise to pay it off and they promise to then delete it.) You have unfortunately paid it off entirely, so you have a bit less leverage, but you may nonetheless be able to get someone to help.

Explain that opening the account has harmed your score, you really want to be a regular customer of Dell in the future, the bad score has damaged your chance of getting a home unless it gets removed, cry a little, etc. Other people here on the forum know a lot about how to negotiate these kinds of things, so see if you can find somebody who can give you tips. Politeness and persistence (a willingness to try calling once a week for a long time till you find somebody who agrees) may be the keys.

Re: Paid Dell DFS Loan, leave CL open or not?

Anonymous — Sun, 09 Oct 2016 02:59:55 GMT

As far the Credit Mix scoring category goes, all you need to know for the future is this:

INSTALLMENT:

An open installment loan helps a lot. If you don't have one, then there's an easy way to satisfy this requirement that will cost you almost nothing. (It's called the Share Secure Loan technique.)

REVOLVING:

Three open credit cards help a lot.

THICKNESS

Having a total of 6+ accounts (closed and open together) helps a lot. The threshold may be less for FICO (4? 5?) but six is definitely enough.

FINANCE COMPANY ACCOUNTS:

Avoid having these ever.

Re: Paid Dell DFS Loan, leave CL open or not?

Anonymous — Sun, 09 Oct 2016 03:48:53 GMT

Is Dell really a consumer finance account? When I had them it was like any other store card.

Re: Paid Dell DFS Loan, leave CL open or not?

Anonymous — Sun, 09 Oct 2016 04:22:42 GMT

When I followed the link that the OP gave us, the account was listed on all three of his reports as a finance company account. (Under "account type.")

The rule I always use is this. If a store is offering me a deal associated with buying a particular piece of merchandise (a big screen TV, a computer, a washer/dryer, a sofa, whatever) where the attraction is they provide some kind of credit that allows me to walk away with it without paying in full for it right then... I expect that what's being offered will show up on my reports as a finance company account.

Re: Paid Dell DFS Loan, leave CL open or not?

bourgogne — Sun, 09 Oct 2016 23:53:18 GMT

@Anonymous wrote:
You were not a bonehead. It's an obscure, even arcane, piece of FICO lore, that certain kinds of accounts are harmful to your score. (Namely "finance company" accounts, like where you buy a computer at Dell or a fridge at Best Buy or bedroom suite at Rooms To Go.)

Very few people know this. What really bites is that, as I understand it, you were trying to do what FICO suggests! Namely, to broaden your credit mix to include a diversity of account types. It's a scandal in my view that myFICO doesn't clear state in the Learn About Scores section that finance company accounts will be considered negatively by FICO.

Anyway, bottom line is that you have the account now. What you need to know is what to do with it -- right?

The good news is that Dell (or the FC) does have the power to delete this record from your credit reports. They may not do it, but all creditors have that ability (to remove one of their accounts). This is the same principle that is behind people who get collections deleted. It's called "Pay For Delete." Some companies won't do it, but they do have the ability to do it.

See if you can find a rep with the company managing the account who will be willing to arrange a PFD arrangement. (You promise to pay it off and they promise to then delete it.) You have unfortunately paid it off entirely, so you have a bit less leverage, but you may nonetheless be able to get someone to help.

Explain that opening the account has harmed your score, you really want to be a regular customer of Dell in the future, the bad score has damaged your chance of getting a home unless it gets removed, cry a little, etc. Other people here on the forum know a lot about how to negotiate these kinds of things, so see if you can find somebody who can give you tips. Politeness and persistence (a willingness to try calling once a week for a long time till you find somebody who agrees) may be the keys.

@Anonymous,

Thank you for your response but I think there might be some confusion. To summarize;

Opened the 2K account in 12/15. Put ~$ 1175 against it. It reported over 50% utilization. I paid it down to below 20% Util made random payment amounts until the time I paid it off this past Friday.

I don’t owe then anything further. I never missed a payment. Life is good.

My only question is should I keep the TL open or not. There will be I imagine a 2K CL still available to me should I want it which of course I never will.

I want to know if it will help, harm or do nothing to my scores to leave it as is.

Knowing this please advise and thanks again for the response and help.

Re: Paid Dell DFS Loan, leave CL open or not?

Anonymous — Mon, 10 Oct 2016 02:27:39 GMT

I totally understood. What I was suggesting is a third possibility that had not occured to you. The three options:

(1) Leave the account open (but at a $0 balance).

(2) Close the account.

(3) Work with the creditor to see if they will delete it altogether from your reports.

Options 1 and 2 occured to you. But for both of these, a closed finance account still remains on your report. In the case of #2, it will eventually fall off, but not for ten years. This is a long time to have a record on your report that FICO doesn't like. (Again, FICO penalizes you for having any account of type "finance company" on your report.)

My advice was based on #3: attempting to get the creditor to delete it altogether, in a way analgous to the way people get creditors to delete collections from their reports.

If you cannot get them to do that, then #2 is far superior to #1, since the account will eventually fall off.

PS. Insurance companies also view FC accounts as a big red flag and may charge you higher premiums if they see them. Another reason to see if a deletion is possible.

Re: Paid Dell DFS Loan, leave CL open or not?

bourgogne — Mon, 10 Oct 2016 03:46:19 GMT

@Anonymous wrote:
I totally understood. What I was suggesting is a third possibility that had not occured to you. The three options:

(1) Leave the account open (but at a $0 balance).

(2) Close the account.

(3) Work with the creditor to see if they will delete it altogether from your reports.

Options 1 and 2 occured to you. But for both of these, a closed finance account still remains on your report. In the case of #2, it will eventually fall off, but not for ten years. This is a long time to have a record on your report that FICO doesn't like. (Again, FICO penalizes you for having any account of type "finance company" on your report.)

My advice was based on #3: attempting to get the creditor to delete it altogether, in a way analgous to the way people get creditors to delete collections from their reports.

If you cannot get them to do that, then #2 is far superior to #1, since the account will eventually fall off.

PS. Insurance companies also view FC accounts as a big red flag and may charge you higher premiums if they see them. Another reason to see if a deletion is possible.

I am very sorry, I read what you wrote too quickly as I was trying to unburn something on the stove. I will act on what you suggest with the delete tomorrow or # 2 it worst case. wow this is insane, I just thought the loan was reporting like a card, I had no idea or the impact of the situation. many thanks again and have a good week.

Re: Paid Dell DFS Loan, leave CL open or not?

Anonymous — Mon, 10 Oct 2016 13:54:24 GMT

I really liked "I was trying to unburn something on the stove." I have spent much of my life trying to unburn things that were on the stove.