topic Re: Prosper loan in General Credit Topics

Prosper loan

corymcd88 — Thu, 09 Feb 2017 18:44:07 GMT

I just got a Prosper loan for $8.500 at 10,9%. How do they report. I have herd that they report in a negative way. Is that true?

Re: Prosper loan

Anonymous — Thu, 09 Feb 2017 19:11:14 GMT

For scoring purposes it is considered a Finance Company

Re: Prosper loan

corymcd88 — Thu, 09 Feb 2017 20:41:25 GMT

What is a Finance Company in Prosper terms? Will it be bad on my reports?

Re: Prosper loan

Anonymous — Thu, 09 Feb 2017 20:45:59 GMT

Nope.

i have one with them almost paid off for 10000.00 me they report every month it will help your score it won'taffect your utilization it's almost like a car loan

Re: Prosper loan

Appleman — Thu, 09 Feb 2017 20:46:37 GMT

A few of the bureaus show a finance company account as a negative.

However, if you had $8,500 of credit card debt with a credit line of $10,000 and obtained a personal loan to payoff the credit card, your score would likely really get a good increase. The FICO models score debt differently, even though you still owe $8,500, your credit card utilization is very low now. Installment debt is not scored so heavily.

Hopefully that makes sense.

Re: Prosper loan

corymcd88 — Thu, 09 Feb 2017 21:10:06 GMT

Thanks.

Re: Prosper loan

Scupra — Thu, 09 Feb 2017 21:50:45 GMT

@corymcd88 wrote:
What is a Finance Company in Prosper terms? Will it be bad on my reports?

Do you mean it reports as an installment loan? Sorry, just confused by "finance company" term

Re: Prosper loan

Anonymous — Thu, 09 Feb 2017 22:48:20 GMT

@corymcd88 wrote:
What is a Finance Company in Prosper terms? Will it be bad on my reports?

Some FICO versions don't like them.

Re: Prosper loan

Appleman — Fri, 10 Feb 2017 14:41:24 GMT

Agreed, at least one bureau will count a finance company loan in the list of negative items on a report.

But, it has only helped my score.

Re: Prosper loan

DaveInAZ — Sat, 11 Feb 2017 14:32:09 GMT

@Anonymous wrote:
@corymcd88 wrote:
What is a Finance Company in Prosper terms? Will it be bad on my reports?
Some FICO versions don't like them.

Transunion doessn't like them. When I had a Prosper loan I'd always see "too many consumer loans" in the factors holding down my score on FICOs based on TU (only had the 1 loan). But I don't recall any significant bounce when I paid it off.

Re: Prosper loan

RobertEG — Sat, 11 Feb 2017 17:57:58 GMT

For years, loans from lendors identified as a "consumer finance company" was viewed by others and by scoring algorithms as a negative.

Consumer finance companies are generally defined as lendors who offer credit at higher interest rates than those generally prevailing with major banks.

Back in the day, many rural consumers had no choice other than to drive to a major city or else seek credit with a local lendor, who usually had higher rates.

However, with the advent of internet electronic access to credit application, consumers now have general access to national banks, and can shop for the best rates for which they qualify.

Thus, use of a consumer finance company was viewed as an indication that the consumer could not obtain better credit from a major creditor, and was thus a negative in manual reviews and scoring algorithms.

However, many consumer finance loans are offered at low or zero introductory rates, such as that new stove from Sears.

Thus, using a consumer finance company can actually be an indication of a consumer getting better, not worse, terms.

Gradually, the general stigman on use of a consumer finance company is waning, as demonstrated by newer scoring models.

It is kinda an archaic view that is in transition.

Re: Prosper loan

Anonymous — Sat, 11 Feb 2017 20:18:29 GMT

RobertEG - good to hear this is turning around as we just used a finance company TD Bank Renovate to purchase a new sectional. We have 100k in available credit however the best card we have has 17 mos left with zero interest or our lowest APR is 10%. They offered 3 years at no interest so we took that deal.

I was surprised to then see comments that using this type of company meant we were likely 'unable to find better credit options'. My thought was really? Where can you get better than 0% for 36 month?

Now I get where it can go wrong - if you pay late or dont pay it off in time, then you owe all that interest which is likely a high rate. I am sure this is where the stigmata comes from; but that can happen with any promo offer you fail to meet the terms on.

Re: Prosper loan

SouthJamaica — Sat, 11 Feb 2017 21:42:09 GMT

@RobertEG wrote:
For years, loans from lendors identified as a "consumer finance company" was viewed by others and by scoring algorithms as a negative.

Consumer finance companies are generally defined as lendors who offer credit at higher interest rates than those generally prevailing with major banks.
Back in the day, many rural consumers had no choice other than to drive to a major city or else seek credit with a local lendor, who usually had higher rates.
However, with the advent of internet electronic access to credit application, consumers now have general access to national banks, and can shop for the best rates for which they qualify.
Thus, use of a consumer finance company was viewed as an indication that the consumer could not obtain better credit from a major creditor, and was thus a negative in manual reviews and scoring algorithms.

However, many consumer finance loans are offered at low or zero introductory rates, such as that new stove from Sears.
Thus, using a consumer finance company can actually be an indication of a consumer getting better, not worse, terms.

Gradually, the general stigman on use of a consumer finance company is waning, as demonstrated by newer scoring models.
It is kinda an archaic view that is in transition.

Let me offer an alternate theory on why there might be a 'stigma' built into the FICO algorithms.

Possibly it's because banks are in control of the FICO world, and don't like competition.

Re: Prosper loan

Anonymous — Sun, 12 Feb 2017 00:55:25 GMT

@SouthJamaica wrote:
@RobertEG wrote:
For years, loans from lendors identified as a "consumer finance company" was viewed by others and by scoring algorithms as a negative.

Consumer finance companies are generally defined as lendors who offer credit at higher interest rates than those generally prevailing with major banks.
Back in the day, many rural consumers had no choice other than to drive to a major city or else seek credit with a local lendor, who usually had higher rates.
However, with the advent of internet electronic access to credit application, consumers now have general access to national banks, and can shop for the best rates for which they qualify.
Thus, use of a consumer finance company was viewed as an indication that the consumer could not obtain better credit from a major creditor, and was thus a negative in manual reviews and scoring algorithms.

However, many consumer finance loans are offered at low or zero introductory rates, such as that new stove from Sears.
Thus, using a consumer finance company can actually be an indication of a consumer getting better, not worse, terms.

Gradually, the general stigman on use of a consumer finance company is waning, as demonstrated by newer scoring models.
It is kinda an archaic view that is in transition.
Let me offer an alternate theory on why there might be a 'stigma' built into the FICO algorithms.

Possibly it's because banks are in control of the FICO world, and don't like competition.

A brand new conspiracy theory.