Prosper loan is a negative factor on my CR?!?!

[mlynne37wiu]

Hi all, I just paid off a Prosper account (www.prosper.com) and Prosper is a community where people "bid" with each other to grant people loans.  I went there because I needed a $2,500 loan and got it for a much cheaper interest rate than if I would have gone to a traditional bank.

I was checking my CR and Experian states this as negatively impacting my CR:

"You have a consumer finance account on your credit report.

Consumer finance companies typically grant loans to people with poor credit histories. Their customers often cannot get loans from traditional lending companies such as banks or credit unions. These are often high-interest loans because the consumer finance company is assuming more risk by lending to people with less than perfect credit.

The fact that you have a consumer finance company loan on your credit report means that you represent a higher risk to lenders than someone with no consumer finance loans. Even if this consumer finance account is closed, it will still lower your FICO score. However, its impact on your score will lessen as time passes."

This really infuriates me because I went to Prosper because I got a lower rate, so it was saving me interest and now it's being classified as a "bad" type of loan by Experian.  Is there anything that can be done about this?  I don't think contacting Experian will be of any help and I'm hoping that now that it is paid off it will not have as much of a negative impact.

Message Edited by mlynne37wiu on 05-30-2008 10:46 AM

[Anonymous]

Yes- prosper is a CFL

Even after paid - the presence of a CFL will be there as long as the account is on your report.

This is a SMALL number of points.

IMO- saving $ trumps FICO scores.

---

mlynne37wiu wrote:

Hi all, I just paid off a Prosper account (www.prosper.com) and Prosper is a community where people "bid" with each other to grant people loans.  I went there because I needed a $2,500 loan and got it for a much cheaper interest rate than if I would have gone to a traditional bank.

I was checking my CR and Experian states this as negatively impacting my CR:

"You have a consumer finance account on your credit report.

Consumer finance companies typically grant loans to people with poor credit histories. Their customers often cannot get loans from traditional lending companies such as banks or credit unions. These are often high-interest loans because the consumer finance company is assuming more risk by lending to people with less than perfect credit.

The fact that you have a consumer finance company loan on your credit report means that you represent a higher risk to lenders than someone with no consumer finance loans. Even if this consumer finance account is closed, it will still lower your FICO score. However, its impact on your score will lessen as time passes."

This really infuriates me because I went to Prosper because I got a lower rate, so it was saving me interest and now it's being classified as a "bad" type of loan by Experian.  Is there anything that can be done about this?  I don't think contacting Experian will be of any help and I'm hoping that now that it is paid off it will not have as much of a negative impact.

Message Edited by mlynne37wiu on 05-30-2008 10:46 AM

---

[mlynne37wiu]

I agree and it's good to know that a CFL is only worth a few points...and I would definitely choose saving money over a few FICO points any day...as long as they are tiny points!

Thanks for the info.

[mrlimo]

I have never taken a loan out with prosper but I am a current lender over there. I read many posting for loans and think to myself how much many of the people requesting money need MyFico forums.

[fused]

---

mrlimo wrote:

I have never taken a loan out with prosper but I am a current lender over there. I read many posting for loans and think to myself how much many of the people requesting money need MyFico forums.

---

I agree!

[mlynne37wiu]

Very true.  Everyone is rated by their credit score on Prosper and everyone on the site can see your rating...and I have seen so many people rated "HR" for high risk which is the lowest rating there is on Prosper.  This means their credit score is really low and I agree that they could definitely benefit from FICO forums.  

[fused]

There are some (MinnesotaJ) who have Prosper loans reporting as an ordinary installment account while others have it reporting as a CFL. How much was the loan for and at what rate? I'm wondering if these things have anything to do with how it might report.

[mrlimo]

mlynne37wiu

This really infuriates me because I went to Prosper because I got a lower rate, so it was saving me interest and now it's being classified as a "bad" type of loan by Experian.  Is there anything that can be done about this?  I don't think contacting Experian will be of any help and I'm hoping that now that it is paid off it will not have as much of a negative impact.

 I was looking at your tag at the bottom, from 07 to 08. I see you had about +25 across the board WTG on the work of increasing your own scores in just 9 months.

[mlynne37wiu]

The loan was for $2500 and was for around 19.99%.  My credit score was much lower than it is now and I would have had a much higher interest rate at the other places I looked at.  But I took it b/c I knew I'd be able to pay it off in less than a year...and I did.  

But I have a $7,500 cc from Chase for 13%, so maybe it is the % that got me.  But I have had CCs with higher interest rates than 19.99% (all paid off now), so I don't know.

Message Edited by mlynne37wiu on 05-30-2008 12:11 PM

[fused]

As for how they report, I'm going to do some digging and see what turns up. Were you a grade "D" or "C"?