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Prosper loan and impact on FICO score

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Frequent Contributor

Prosper loan and impact on FICO score

Hi All,

 

I obtained a Prosper loan to complete a home reno project.  Indubitably, the terms were reasonable and the process was easy.  However, when I look at the different FICO score variations (e.g. FICO Score 4, FICO Score 5, FICO Bankcard Score 5) one of the negative score factors is listed as "you have a consumer finance account on your credit report".  

 

What is the rationle for this?  Is it because consumer finance loans have historically been considered high risk loans (subprime) that often came with high interest rates etc?  In the case of Prosper this logic no longer holds true.  In my situation, Prosper offered competitive rates vs. traditional lending channels. 

 

Thoughts?

 

 

Message 1 of 9
8 REPLIES 8
Valued Contributor

Re: Prosper loan and impact on FICO score

You are thinking correctly. Previously a Finance company was a loan of last resort. 

 

Now as you have learned the finance companies offer very competitive options.

Message 2 of 9
Senior Contributor

Re: Prosper loan and impact on FICO score

I have the same entry for my closed Lending Club loan.

Message 3 of 9
Valued Contributor

Re: Prosper loan and impact on FICO score

Never knew that was something that could show as a negative. Good data point.
                               

Total Credit: $240,100Credit Utilization: 1%AAoA: 5 years, 7 monthsInstallments: Car Lease, Marcus LoanNegatives: 0

LOWES-35k | BOA-32.5k | AMEX-30k | DISC-27.1k | ALLIANT-25k | NFCU-25k | BARC-15k | BBUY-12k | CHASE-10k | WAL-10k | CITI-9.7k | PENFED-9.7k


Message 4 of 9
Senior Contributor

Re: Prosper loan and impact on FICO score

When I had a Prosper loan I saw that negative "consumer finance account" notation, but only on TU based FICO. But my TU, EQ & EX scores were all within a point or two of each other so I ignored it. Now that it's paid off I don't see it anymore. But I have a car loan through a small local CU that only reports to EQ & EX, so on my TU score now I see a negative "lack of any recent installment loan" negative notation. All 3 scores are still within a point or two of each other, so I think it's BS - TU didn't like that I had a consumer ffinance installment loan, and now they don't like that I don't have one.


Fico 08: 734/716/734 TU/EX/EQ
Message 5 of 9
Senior Contributor

Re: Prosper loan and impact on FICO score


@RM21 wrote:
Never knew that was something that could show as a negative. Good data point.

In the overall scheme of things, it's a small negative. Most take out these loans to wipe out high revolving utilization, which is a far worse negative.

Message 6 of 9
Moderator Emeritus

Re: Prosper loan and impact on FICO score


@CAPTOOL wrote:

@RM21 wrote:
Never knew that was something that could show as a negative. Good data point.

In the overall scheme of things, it's a small negative. Most take out these loans to wipe out high revolving utilization, which is a far worse negative.


Which bureans and FICO models have you seen the notation on?

 

I have it on EQ FICO 04 models, and looking back through my reports I had it on an EX FICO 8 Auto enhanced industry option.

 

Transunion is a non-starter for me, since not certain if my CFA is even on that account (I have one installment loan which only reports EQ/EX) and I have too many things wrong with that one report to get meaningful information regarding a minor negative like a CFA.

 

 




        
Message 7 of 9
Senior Contributor

Re: Prosper loan and impact on FICO score


@Revelate wrote:

@CAPTOOL wrote:

@RM21 wrote:
Never knew that was something that could show as a negative. Good data point.

In the overall scheme of things, it's a small negative. Most take out these loans to wipe out high revolving utilization, which is a far worse negative.


Which bureans and FICO models have you seen the notation on?

 

I have it on EQ FICO 04 models, and looking back through my reports I had it on an EX FICO 8 Auto enhanced industry option.

 

Transunion is a non-starter for me, since not certain if my CFA is even on that account (I have one installment loan which only reports EQ/EX) and I have too many things wrong with that one report to get meaningful information regarding a minor negative like a CFA.

 

 


I've seen it on TU Fico 8 classic that I know of for sure, and as one of the reason codes on AA letters.

Message 8 of 9
Moderator Emeritus

Re: Prosper loan and impact on FICO score


@CAPTOOL wrote:

@Revelate wrote:

@CAPTOOL wrote:

@RM21 wrote:
Never knew that was something that could show as a negative. Good data point.

In the overall scheme of things, it's a small negative. Most take out these loans to wipe out high revolving utilization, which is a far worse negative.


Which bureans and FICO models have you seen the notation on?

 

I have it on EQ FICO 04 models, and looking back through my reports I had it on an EX FICO 8 Auto enhanced industry option.

 

Transunion is a non-starter for me, since not certain if my CFA is even on that account (I have one installment loan which only reports EQ/EX) and I have too many things wrong with that one report to get meaningful information regarding a minor negative like a CFA.

 

 


I've seen it on TU Fico 8 classic that I know of for sure, and as one of the reason codes on AA letters.


Thanks, may well be part of all FICO 04/8 models and industry options; something to check on when my files are cleaned up in another 1.5 years since the minor negative is much more likely to hit top 4 rather than just miss it on most.




        
Message 9 of 9
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