PIONEER MILITARY LENDING

[Anonymous]

Looking for some takes on a decision I need to make. I am in the middle of major credit repair in preparation for a home purchase in the next 12 months or so. All is going great and my score is already up over 80 pts in 2 months. I got rid of 2 low limit CCs that were only hurting me. My car pays off this month and we are selling our condo so we can reuse our VA loan. By the fall ill have one revolving acct with a $9000 limit and less than a $2000 balance. I am looking into adding a secured CC also. The only other acct ill have open is a 36 month installment loan with pioneer military lending. ($8000 or so)  I am about half way paid with perfect pays to this point. I can't find anyone that can tell me if this is a "lender of last resort" that will only hurt my credit, or if I need to keep it open to have some balance to my CU. I understand that there may not be a definite right answer, but some advice would be great.

[llecs]

I don't know if you needed a loan or not, but you can easily have close to or over a 800 FICO score without any installment loans reporting. If your goal is a high score, then I wouldn't spend money just to get a couple extra points.

If you did need a loan, then look at other sources like your local CU, Penfed/NFCU/USAA (if applicable), local bank, etc.

[guiness56]

Pioneer Military Lending is a consumer finance company, but deal only with the military. 

When you pay by allotment there is less chance for a messup but, they do happen.

According to my credit report, they are not looked upon favorably.  As soon as my account is paid I will not use them again. 

[Anonymous]

Thanks for the input. my original plan was to pay it off in full in the next few months. Ive had second thoughts looking at the lack of credit Ill have open when this is all done. you may have confirmed my suspicions that having a consumer finance company on my credit is worse than not having an installment on my report at all.

[Anonymous]

I've never heard of a finance company being looked upon unfavorably by a credit bureau. In fact, I'd qusetion anyone who claims otherwise -- the algorithms simply don't look at that. They look at the type of credit (loan, CC, etc.), whether its paid, available credit vs. credit used, etc., not who issued the credit, in determining your score.

If they didn't, than what would stop them from, say, treating Bank of America customers better than some small CU in Podunksville, Arkansas?

So, no, the loan you have won't hurt your score.

If you want to raise your score, keep the $9K credit card open, but pay it off in full. Then, just use it for small purchases each month (say, $50 - $100) and pay it in full before the grace period ends (see your card's fine print for how long that is). That'll send it up quickly and maintain that account.

Also, don't close CC accounts that you've had for a while. Keep them open since that'll increase your ratio of used vs. available credit.

You could get another card, but I doubt you need to -- have that card, the loan, and pay everything else on time and you'll be golden!

Sorry this is late, but hope it helps!

[Anonymous]

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@Anonymous wrote:

I've never heard of a finance company being looked upon unfavorably by a credit bureau. In fact, I'd qusetion anyone who claims otherwise -- the algorithms simply don't look at that. They look at the type of credit (loan, CC, etc.), whether its paid, available credit vs. credit used, etc., not who issued the credit, in determining your score.

If they didn't, than what would stop them from, say, treating Bank of America customers better than some small CU in Podunksville, Arkansas?

So, no, the loan you have won't hurt your score.

If you want to raise your score, keep the $9K credit card open, but pay it off in full. Then, just use it for small purchases each month (say, $50 - $100) and pay it in full before the grace period ends (see your card's fine print for how long that is). That'll send it up quickly and maintain that account.

Also, don't close CC accounts that you've had for a while. Keep them open since that'll increase your ratio of used vs. available credit.

You could get another card, but I doubt you need to -- have that card, the loan, and pay everything else on time and you'll be golden!

Sorry this is late, but hope it helps!

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Unfortunately, "Consumer Finance" accounts are often commented as "What is hurting you" on your FICO report.  Consumer Finance is considered as a subprime and questionable debt....so it can hold your score down some.

HOWEVER:  If you can pay off this debt in the next few months. DO IT!  Do not stay in debt for a theoretical FICO points.  More important to your home loan will be Debt to Income.  Having an $8k debt paid off still helps your credit, even closed.  It is not only open accounts that positively factor in.  This loan account will factor into your Average Age of Accounts for 10 years after you close.  Plus paying it off will reduce your debt ratios which could actually help you.  At times you can see a minor drop due to rebucketing, but this isn't usually a problem if you have 12 months to recover before the home loan....in fact doing it now so you have time to recover from any fluctuations is best.

DISCLAIMER:  Make sure you still have adequate cash reserves and down payment.  If you are going to be cash broke or just barely able to cover down and closing, then consider which debts paid down are strategic to your loan and what cash you need to reserve for VA & closing fees, down payment plus some buffer cash.

[llecs]

CFLs will also continue to ding you after you pay it off.

[Anonymous]

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@llecs wrote:
CFLs will also continue to ding you after you pay it off.

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The consolation prize is the lower debt ratios

[Anonymous]

Unfortunately, "Consumer Finance" accounts are often commented as "What is hurting you" on your FICO report.  Consumer Finance is considered as a subprime and questionable debt ... so it can hold your score down some.

From my experience, yes and no.

I have yet to see someone have their score lowered because of a loan from a finance company that is paid on time. In fact, if they pay on time and in full, it can help their score, just as any debt will, and the trade line just being on the report won't have a negative impact. Or at least not that I've ever seen, and I've been writing and counseling on the subject for six years. 

Of course, like any other bill, if you're late or go into collections, your score is hosed. Add in the high rate and, yeah, it'll ding a score. Perhaps more than another type of debt.

Also, CFL's that offer "normal" rates as well shouldn't do any damage at all just because of the company (or none that are noticeable).

All that being typed, some lenders might see it is a negative when reviewing a report, depending on the interest rate. But that's a person-based judgment, not a formulaic one, and quite hard to judge.

For the case of the thread starter, I think we all have pretty much the same advice:

• Pay off the $8K card first
• Focus on paying the loan second
• Don't get another card or loan until those are done, or absolutely needed
• Keep enough cash for emergencies (from $500 to 2-6 months pay, depending on lifestyle, income, etc.) so no loan or CC is needed for those

Do that, and it'll be all good. :-)