The loans you get through Citifinancial are CFL's (consumer finance loans), and their presence drops your score, although not much, because they are considered excessively easy to get, and supposedly are taken by desperate consumers. (So why isn't First Premiere and company treated the same way?)
Anyway, furniture store loans are often the same, although I've read that some are set up as revolving, and therefore don't carry the CFL ding. I'm not sure how this would work, because revolving implies that you can pay down part or all of your balance, and then go back for more. The furniture loans that I got back in the day were for a dining room hutch for $200, or coffee/end table sets for $100, or whatever, and so they were definitely loans, not revolving. (We weren't exactly living high on the hog back in the day!
)
Barry and the other admins get an earful on this topic from us, along with rating CU and local bank cards a bit lower than bank cards from the national banks. IMO, these are two left-over risk factors from the dinosaur days, that are now ridiculous.
Anyway, furniture store loans are often the same, although I've read that some are set up as revolving, and therefore don't carry the CFL ding. I'm not sure how this would work, because revolving implies that you can pay down part or all of your balance, and then go back for more. The furniture loans that I got back in the day were for a dining room hutch for $200, or coffee/end table sets for $100, or whatever, and so they were definitely loans, not revolving. (We weren't exactly living high on the hog back in the day!
)Barry and the other admins get an earful on this topic from us, along with rating CU and local bank cards a bit lower than bank cards from the national banks. IMO, these are two left-over risk factors from the dinosaur days, that are now ridiculous.
@Anonymous wrote:
Hmm. So is there any way you can distinguish is a loan is a CFL versus a normal loan before applying?
As rating CU cards as somehow less "good" than large banks, that is absolutely ridiculous.
That's what is so freaking frustrating. You can't even tell on your credit report how a loan is being treated, until you get a negative on screen 2 about the presence of a CFL. There is a code on them that doesn't show on your reports, but it tells the scoring formula how to treat them.
About the best rule of thumb that we have is if the words "finance" or "financial" are in the company name, it's going to be a CFL. But that's awfully vague, and my old Honda lease was from Honda Finance, and that had dang well better not be treated as a CFL!
Again, if they want to downgrade an account for being too-easy to get, fine, but do the same for the bottom-feeder CC's.
As for CU's and local banks carrying less weight than the supposed big boys, that might have made sense in the pre-Internet days, when these were truly local financial institutions with relatively low assets. But it fries my patootie to think that the scoring formula might regard my USAA and PenFed cards as inferior to, oh, I don't know, Tribute? Applied? (And I don't know if these two are considered national banks; I'm just throwing out examples.)
You've hit two of my big grrrs. Can you tell?
