topic Re: What is considered a personal finance account? in General Credit Topics

Consumer Finance Account

Cjethompson2017 — Mon, 29 Jun 2020 03:05:31 GMT

What on earth does that mean?? And why would it have a negative impact on my credit?? Seems a bit odd to me.

Re: Consumer Finance Account

SouthJamaica — Mon, 29 Jun 2020 03:24:54 GMT

@Cjethompson2017 wrote:
What on earth does that mean?? And why would it have a negative impact on my credit?? Seems a bit odd to me.

The term is sometimes applied by the older FICO scoring models to store installment purchases, some auto loans, and to some online loans.

It is not clear that the designation has a negative impact on your credit. It appears that it might with some of the older scoring models.

There is no good reason why it should have negative connotations.

Re: Consumer Finance Account

Anonymous — Mon, 29 Jun 2020 16:44:11 GMT

We have all seen them. A good example is a mattress store that has signs plastered all over "No credit needed". There is a good chance it will be a CFA. Generally speaking, people who take these kinds of loans are considered higher risk because of things like no credit, bad credit, inability to pay in full, etc. Therefore, the mere presence of a CFA on your reports would not be a favorable one.

I do agree though that it shouldn't matter. Whether it is a loan from a credit union, payday loan, or a CFA, the bottom line is the payment history on that account. But Fico no like-o.

Re: Consumer Finance Account

Cjethompson2017 — Mon, 29 Jun 2020 16:38:19 GMT

I just find that to be absolutely ridiculous and should have no meaning to your fico. The ones I had are all paid off. How annoying. 😂

Re: Consumer Finance Account

AzCreditGuy — Mon, 29 Jun 2020 18:12:12 GMT

@Anonymous wrote:
We have all seen them. A good example is a mattress store that has signs plastered all over "No credit needed". There is a good chance it will be a CFA. Generally speaking, people who take these kinds of loans are considered higher risk because of things like no credit, bad credit, inability to pay in full, etc. Therefore, the mere presence of a CFA on your reports would not be a favorable one.

I do agree though that it shouldn't matter. Whether it is a loan from a credit union, payday loan, or a CFA, the bottom line is the payment history on that account. But Fico no like-o.

This is the disconnect with the system and fails to show a true CFA vs a loan from a non-bank source when it shows up on the credit report.

Re: Consumer Finance Account

nyyankees877 — Mon, 29 Jun 2020 19:03:03 GMT

@Cjethompson2017 wrote:
What on earth does that mean?? And why would it have a negative impact on my credit?? Seems a bit odd to me.

I had a Lending Club unsecured loan from CC debt and a Shefield Financial secured loan for my Jetski. Crazy they consider my Jetski a personal loan when they could repo it if they want!

Re: Consumer Finance Account

Girlzilla88 — Mon, 29 Jun 2020 19:28:11 GMT

I have 3 LOL one for my New AC units I had to replace on my home that were 5 years over Oldest Expectancy lol, 1 from a Vacuum (which I still don't understand why) LOL and 3rd is an actual mini loan I did last year or the year before Idk....but yea honestly I feel like it should be the 1 butttttt oh well XD

Re: Consumer Finance Account

ldkcivilservant — Tue, 30 Jun 2020 15:50:05 GMT

Single one here from Affirm, PIF, holds my Experian down about 10 points lower than the others and it's the only differance (Affirm only report to Ex)

Re: Consumer Finance Account

Anonymous — Mon, 06 Jul 2020 01:40:54 GMT

OK let’s think about this from the lender's viewpoint. Why would someone use a finance company and pay a higher interest rate if they were able to use a bank or credit union and get a lower rate?

Now true enough it may be due to ignorance on some peoples part. However for many its because they cannot procure financing at a bank or credit union.

As a consequence when you use a finance company there is a negative marker applied and it does have a negative impact on your score.

It’s just like loan modifications are now negatives in version 9 and will reduce your score. Doesn’t matter if I agree with it, it’s the way it is.

Re: Consumer Finance Account

IPIF — Sun, 05 Jul 2020 10:55:07 GMT

It makes no sense that when buying a new car someone should be penalized for taking a zero percent promo rate at Honda Financial instead of 2.9% at a credit union.

Re: Consumer Finance Account

Anonymous — Sun, 05 Jul 2020 16:40:22 GMT

I totally agree with you, there shouldn’t be a penalty for that.

Re: Consumer Finance Account

Anonymous — Sun, 05 Jul 2020 19:02:32 GMT

I used Affirm once in the past. It was 0% for 12 months. Paid it off in 6 months and it did not move my experian credit score at all.

Re: Consumer Finance Account

Anonymous — Sun, 05 Jul 2020 19:05:30 GMT

@Anonymous wrote:
OK let’s think about this. Why would someone use a finance company and pay a higher interest rate if they were able to use a bank or credit union and get a lower rate?

Now true enough it may be due to ignorance on some peoples part. However for many its because they cannot procure financing at a bank or credit union.

As a consequence when you use a finance company there is a negative marker applied and it does have a negative impact on your score.

It’s just like loan modifications are now negatives in version 9 and will reduce your score. Doesn’t matter if I agree with it, it’s the way it is.

The problem is that Affirm, for example, often offers 0% financing at many places. In fact I was mattress shopping yesterday and came across multiple 0% for 12 month Affirm offers.

Re: Consumer Finance Account

Cjethompson2017 — Mon, 06 Jul 2020 01:35:40 GMT

I think it's bs to be honest. If I am somebody who is having difficulty getting a loan from a bank, how else am I to raise my score? Get less than attractive financing from somebody else. But, if I pay on time and pay it off, why does it matter??

Re: Consumer Finance Account

Anonymous — Mon, 06 Jul 2020 01:38:55 GMT

That's why its so unfair. Just like you take advantage of 0% financing and then get hit for utilization for saving money! But it is what it is.

Affirm is a bank tho right? I meant to go read that link and forgot... here I go...

Re: Consumer Finance Account

Brian_Earl_Spilner — Mon, 06 Jul 2020 01:46:11 GMT

I really don't care if I have a CFA on my reports. If Affirm is gonna give me 0% financing on something, I'm taking it. Hell, right now they're offering me up to $2500 in 0% financing through some of their partners.

Re: Consumer Finance Account

Iusedtolurk — Mon, 06 Jul 2020 02:04:11 GMT

@Brian_Earl_Spilner wrote:
I really don't care if I have a CFA on my reports. If Affirm is gonna give me 0% financing on something, I'm taking it. Hell, right now they're offering me up to $2500 in 0% financing through some of their partners.

Agree! Sometimes you have to make the choice between Finances and Credit Scores that works better for you at the time.

Re: Consumer Finance Account

Anonymous — Mon, 06 Jul 2020 02:49:39 GMT

Finances over FICOs.

Re: Consumer Finance Account

Anonymous — Mon, 06 Jul 2020 04:09:58 GMT

@Anonymous wrote:
That's why its so unfair. Just like you take advantage of 0% financing and then get hit for utilization for saving money! But it is what it is.

Affirm is a bank tho right? I meant to go read that link and forgot... here I go...

No, Affirm is literally the definition of a consumer finance company.

Re: Consumer Finance Account

Anonymous — Mon, 06 Jul 2020 04:12:36 GMT

Did not know that.