NEWBIE - Please HELP me! Lending Club loan

[Anonymous]

Hi everyone.

My story is simple yet I think I screwed up big time!

I’m just shy of 5 years post BK7. My rebuild is complete I have great cards and a lease. My scores are 680+

My daughter goes to a private school and this year they installed a new program where if you pay the next year in advance you save a nice %. Her school is quite expensive. So I looked at options cause I will be paying it back within 6-12 months. The very best option is lending club at 8.1% better than NFCU and PENFED. I pulled the trigger Friday and now I am reading they code the loan as a consumer finance loan and it will HURT me when going to get a mortgage. (My first) next summer??? I’m sadly freaking out! I think I have five days to cancel it. What to do?

[DaveInAZ]

Welcome to MyFico forums!

The coding "consumer finance loan" is really just a minor annoyance and you see it primarily on Transunion. When I had a Prosper loan a couple years ago I'd see the "too many consumer finance loans" on TU, even though I only had the one, it really didn't seem to affect my score.

The primary things that will affect your mortgage application are:

- No new accounts at least 6 months prior to applying

- DTI, Debt to Income ratio. You don't want monthly payments/expenses to exceed 30% (more or less) of expenses.

The 8.1% rate is very good for your scores, if it nets you higher savings on tuition and you can repay it in 6-12 months it sounds like a well planned move.

[Anonymous]

Thank you, Dave.

I am not a score nut that must have 800's. I will be a very happy consumer to have scores in the mid 700's.

I don't understand why these loans hurt the consumer if you pay them on time?

Consumer finance loan? It's an installment loan? I would have taken the loan through NFCU or PENFED if the rates were better.

I can't imagine with the billions Lending Club has loaned that it HURTS one's scores significantly.

I'm trying to make financially responsible moves and don't want this to hurt me. the BK7 was bad enough.

[Anonymous]

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@Anonymous wrote:

Thank you, Dave.

I am not a score nut that must have 800's. I will be a very happy consumer to have scores in the mid 700's.

I don't understand why these loans hurt the consumer if you pay them on time?

Consumer finance loan? It's an installment loan? I would have taken the loan through NFCU or PENFED if the rates were better.

I can't imagine with the billions Lending Club has loaned that it HURTS one's scores significantly.

I'm trying to make financially responsible moves and don't want this to hurt me. the BK7 was bad enough.

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A quick example is think of one of the "buy here, no credit needed" mattress stores.  People that generally accept these types of loans(because their credit is in the crapper) are considered a bigger risk to default.  Therefore, if the presence of one of these types of loans is on your credit report, you are considered more risky.

I agree with your assessment though if you pay it then it shouldn't matter but FICO no LIKE-O.

[DaveInAZ]

I love the "I am not a score nut that must have 800's".  I'm absolutely with you on that.

Yeah, many times smart financial decisions don't maximize your credit score, but with a score of 700+ can get you most of what you want in credit a financial move that saves you money is the smarter move. 

Very nice that you're looking after your daughter to give her a good start in life with a very good education, that's also the smarter move.

All the best

[FlaDude]

I agree with other posters that you should do what is best for your finances. I have an LC loan, Prosper loan, and recently paid off Marcus loan and my TU F8 is a hair over 800 so it's not like they totally kill your score. Maybe it's costing a few points, but not enough to have any major effect.