Revolving LOC reporting as installment loan?

[Anonymous]

So I had an account with this company starting in 2006. It is a jewelry company that I got simply to build my credit. They gave me a $2500 max spend LOC. After 3 years I hadn't used it again and it had since fallen off my credit report. I dont remember how it use to report as I wasnt nearly as credit savvy as I am today.

Ok fast forward to last month. I had remembered I had the old LOC with them and figured I'd give them a call and see if my account was still active. Crazy enough it was still active! I asked if they reported the balance as well as the credit limit (as I figured a LOC should) and they said yes and if I purchased something it would be put back on my report dating back to 2006!

So at that point i was all in. Made a very small purchase using their LOC and have been patiently waiting it to hit my credit next month as I expected a huge jump in credit score. Well today I got a statement from them showing I owed $200 and my available credit at $2379.

So I thought to myself at this point it wouldn't hurt to ask for a CLI to help out my cause even more. Well when I call in they tell me they report it as an installment loan and it would only show my max balance from my original purchase in 2006 of $2068. Would not report my credit limit amount. And my current balance.

So it will look on my credit like I got a loan in 2006 for $2068 and it has taken me 13 years to pay it down to $200?!?

I commend you if you've made it this far, and here is my question to the professionals. By definition an installment loan would have a set amount and that amount would be disbursed on the initial day of the loan and would have a certain time limit to repay that amount, and the amount paid off could not be reused without refinancing the loan resulting in a new account number, correct? And the LOC should be reported as revolving because I'm not receiving the entire amount up front and once the balance is paid down I am able to reuse it under the same account number?

Is there any way to fight this and get it to reported correctly?

And will a bank look at this negatively since itll literally look like it took 13 years to pay down a $2068 installment loan? Thanks in advance

[DaveInAZ]

"Is there any way to fight this and get it to reported correctly?"

- Not really, banks & retail stores offering credit will report it the way they want as long as it's accurate and whether they report the $2068 as a credit limit or original loan amount that's how much you can spend on it, so it's accurate. I once had a car loan with a small local credit union and they reported the loan as an "other" type of installment instead of a car loan, and only reported it to EX & EQ, no to TU. When I complained they said "well, that's just how we do things". Same with another local CU credit card, instead of reporting the balance on the statement they report whatever the balance happens to be on the 5th of the month. 

"And will a bank look at this negatively since it will literally look like it took 13 years to pay down a $2068 installment loan?"

- No, this will actually be a nice positive to your report. First, reporting the account from 2006 to your credit report should be a nice boost to your average age of accounts. Secondly, credit scoring look at credit limits and installment loans the same way in terms of the current balance as a percentage of the credit limit or original loan amount. Your current balance of $200 is only 9.7% of the credit limit or original loan amount, whatever the jewelry store want to call it. That's a very good thing, although under 9% is ideal, credit scoring always round up, so anything over 9% is counted as 10%. I would make the most minimum payment you can and keep the "loan" as long as possible, it's a very positive thing for your credit report.

[Anonymous]

I appreciate that info. The difference is my LOC limit is actually $2580 not the $2060 it reports as my high balance.

What I've found so far is under the FDCPA 1022.41(d)(3)(i) under integrity. It basically states that the information provided to the bureau should be completely accurate and the absence of which would likely be materially misleading in evaluation of a consumer's creditworthiness, credit standing, credit capacity, character... blah blah blah.

Anyone, reporting a revolving account as an installment loan isn't accurately reporting the account in a way that it could misrepresent me as a consumer when I go to apply for a credit card.

Only problem is, if I make a complaint, they probably wont fix it, they will just completely delete it from my tradeline.

The biggest issue is as a tradeline, if I pay it to $0 it will report as closed even though my account is still in fact open with the creditor. Which will hurt my credit. This is completely misrepresenting the tradeline.

How can I get it fixed without pissing off the furnisher and getting it completely deleted?

Any suggestions???

[RobertEG]

If you consider any item of information reported to a CRA to be inaccurate, you can file a dispute with the CRA, requiring the furnisher to investigate the asserted inaccuracy, and the CRA to then reinvestigate based on all the evidence, including the response from the furnisher.

You appear to have a reasonable case if they are reporting an inaccurate portfolio type (base segment, field code 8) of installment and the credit is actually revolvng.

If the furnisher verifies the accuracy as reported, you then have two options.

You can either file a formal complaint with the CFPB and obtain an administrative process for review by the CFPB. or you can file a civil action with the courts contesting the reasonableness of their verification of accuracy of the information.

Filing a civil action can additionally result in a claim for damages if you can show that their inaccurate reporting was either willful or due to negligence.

[Anonymous]

Perfect. Exactly what I figured. In my account it clearly shows my payment, balance, and available credit. Which clearly makes it a revolving LOC. I'll do some more research and probably eventually dispute then follow up with filing a complaint. The lady on the phone said they definitely wont be changing how they report it.

My biggest thing is this is the oldest thing reporting on my credit bureau. I had an auto loan from 18 years ago, but it's no longer on there. This account is 13 years old and I'd hate to see it go away if I dispute it. Problem is, I have to continue buying something in order for it to continue reporting as an open account and their minimum payment is $100/m. I definitely dont want to see it closed, but it's ridiculous to require someone to continue having a balance in order it to report as an active account.

[Anonymous]

Listen you have been given a gift. At any time you can make an installment loan report at under 8.9% giving your credit score a tremendous boost, Assuming you don’t have any other installment loans.

I would hold this gem and when I need to do a credit application, I would put a small charge and let it report under 8.9% so I can get my credit score boost. When you’re not applying for credit who cares?

This is like a free SSL. And it’s got a tremendous amount of age. At any time you can increase your ages tremendously and get a score boost! in addition, if it’s your only installment loan, you get another tremendous boost. Leave it alone, don’t mess this up.

Save it and use it when you need your score to be boosted. Who said you’ve got to keep a balance on it? just put a balance on it when you need your score to go up. You got a lucky horseshoe, I would love to have that.

You have a two part gift. At any time you can increase your ages and at any time you can get optimized installment points, if you don’t have a loan. Do you know how many people would go nuts to have that? And you don’t have to take a hit to AoYA in order to do this, you can do it anytime you want free of penalty.

[Anonymous]

Yaknow, I didnt think of it like that. And had I known it would have reported that way, my credit rebuilding would have went completely different. I currently have a $23k auto loan that basically renders that useless. But I also have another $4800 loan I had used and paid down to $200 just for that affect. With the auto loan on there it seems adding this account back will have almost zero benefit. I had counted on it hitting my revolving accounts. Oh well

[Anonymous]

One day that Car loan will be gone. And regardless, whenever you need to make an application, you can put a balance on there that will cause it to become active, reported and factored into your average age lowering it nicely. Even with the loan it’s a nice plus to your age when you need it.

[Anonymous]

True. I guess that leads me to another question. If I have other active installment loans, will I see a decrease in my credit score when one is paid off? When I paid off my mustang years ago I took a 20 point hit to my credit, but I didnt have any other installment loans at the time.

[Anonymous]

Meaning paying off my auto loan. It is showing at around 95% of the initial loan amount. I'd then have 2 other installment loans under 8.9%