Consumer Finance Account

[sarge12]

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@Anonymous wrote:

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@sarge12 wrote:

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@RootDet wrote:

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@Anonymous wrote:

OK let’s think about this from the lender's viewpoint. Why would someone use a finance company and pay a higher interest rate if they were able to use a bank or credit union and get a lower rate?

Now true enough it may be due to ignorance on some peoples part. However for many its because they cannot procure financing at a bank or credit union.

As a consequence when you use a finance company there is a negative marker applied and it does have a negative impact on your score.

It’s just like loan modifications are now negatives in version 9 and will reduce your score. Doesn’t matter if I agree with it, it’s the way it is.

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The problem is it is highly inaccurate. I went to citizens bank, got a loan from the bank. they chose to outsource servicing of firstmark. because of that, I have a CFA for the next ten years when it wasn't a CFA. 

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OK, let me throw in on this again. I do not believe the newer scoring models like Fico 08 considers CFA debt any different than any other debt. It is the earlier versions that are used to set your mortgage rates that do that. I at least believe that is the case, as I have never seen the existance of a CFA account as being a reason for not having higher scores on Fico 08. I did however see it on the scores primarily used for mortgages. As far as which lenders are considered a CFA, it might surprise you. American Honda Finance that I had a loan with a grand total of 1 day was considered as a CFA and a negative on my scores used for mortgages for years. I think there might be laws preventing auto makers from owning banks, but that is just a guess. I think it might be considered a negative in part due to the fact the lender is partially motivated on some CFA accounts to approve those a bank wont due the the manufacturer and lender being the same entity. Car dealers often offer customer choice of cash discounts or very low finance rates. Since banks are more regulated, such choices likely could not be offered. For appliances, I know GE finance company used to be a heavy lender. CFA's other than those motivated by being seller financed, generally caters to those that might not be able to get bank financing. The only thing I know for a fact is the scores used for setting mortgage rates, do indeed show as a negative reason code. I too think the existence of a CFA account, paid perfectly, as a negative is ridiculous. I doubt that Fico cares what I think though, the practice exists. There are many more negative reason codes for the scores used to set mortgage interest rates. My Fico 08 scores usually say due to my very high score, no negative reason code exists. The scores used for mortgages almost always have had at least one negative reason listed.

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@sarge12Well, we can check the list of codes for Score 8 and easily determine that I think. Neverthless, if the company name has the word "financial" in it, I'd say that'a a clue. And I agree, the auto manufacturers set up these finance companies to assist in selling; they have a conflict of interest in approving those applicants.

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Actually it is more of a common interest, but I know what you mean.

[Anonymous]

myFICO seems to implicate Consumer Finance Accounts negatively impact your score. On my myFICO dashboard, under the scores section and then Experian and all the way near the bottom of the page under the section that reads, "FICO® SCORE 8 INGREDIENTS The following positive and negative factors have the most influence on your FICO Score." it states with a bold red down-arrow that, "You have a consumer finance account on your credit report. Then in the expanded description box it explicitly states, "The presence of a consumer finance company loan on a credit report generally represents a higher risk to lenders compared to having no consumer finance company loans reported. Even if this account is reported as closed, it can still impact the score." It then goes on to notify me that I have 8 of these accounts and that only about 8% of FICO High Achievers have a consumer finance account. 

[Cjethompson2017]

I got a notification today that a personal finance account was removed from my transunion credit report. What is considered a personal finance report?? And how the heck do I figure out which one was removed? Lol. 

[Anonymous]

Compare your before and after reports. Usually if it’s got finance or financial in the name that is suspect it could be anything that is not from a bank or credit union that offers an installment loan.

[IPIF]

Something that almost no one ( except people on fico forums) know is that most of the auto manufacturer's captive lenders are CFAs.

And some banks have consumer finance subsidiaries that are CFAs. Be careful if it has financial in its name. And watch out for peer to peer lending. Something that I want to know is whether the online subsidiaries of some banks that make personal loans are CFAs. For example, Lighstream and Marcus.

[CH-7-Mission-Accomplished]

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@Cjethompson2017 wrote:

I got a notification today that a personal finance account was removed from my transunion credit report. What is considered a personal finance report?? And how the heck do I figure out which one was removed? Lol. 

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I had one account that was labeled as a consumer finance account and it was for a computer I financed through Dell, which appeared as WebBank under lender name.     

[Anonymous]

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@IPIF wrote:

Something that almost no one ( except people on fico forums) know is that most of the auto manufacturer's captive lenders are CFAs.

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My car loan is with Nissan Motor Acceptance Corp (NMAC). I have not seen the CFA reason code.

[Anonymous]

"...For example, Lighstream and Marcus."

Can confirm Lighstream reports as a CFA.  I had never heard of a CFA until I obtained an auto loan with Lightstream a few years back and received an alert for a new CFA, and that was it.

[AzCreditGuy]

The problem with the code CFA is anything that is not coming from a traditional bank could be labeled as "CFA" Which is wrong in my op and should be fixed by whomever is giving that code. I have a SOFI Loan and they are not a CFA but Transcrap seems have it on my SP for a denial of a CLI. 

[sarge12]

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@Anonymous wrote:

myFICO seems to implicate Consumer Finance Accounts negatively impact your score. On my myFICO dashboard, under the scores section and then Experian and all the way near the bottom of the page under the section that reads, "FICO® SCORE 8 INGREDIENTS The following positive and negative factors have the most influence on your FICO Score." it states with a bold red down-arrow that, "You have a consumer finance account on your credit report. Then in the expanded description box it explicitly states, "The presence of a consumer finance company loan on a credit report generally represents a higher risk to lenders compared to having no consumer finance company loans reported. Even if this account is reported as closed, it can still impact the score." It then goes on to notify me that I have 8 of these accounts and that only about 8% of FICO High Achievers have a consumer finance account. 

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And that is where I first learned that American Honda Financial was considered a finance company. It shows as a negative on earlier scores most often used for mortgages. It dropped those scores a good bit, and I actually refinanced my goldwing the next day at my credit union. The mere existance of a CFA for 1 day on my report harmed my mortgage scores for 7 years. I have had no real negatives go on my reports for 20 years. No lates, no collections, nothing. Until 2006 or so, I did have a 1996 chapter 7 filing. Nothing but perfect credit since then...never even late on power, uverse, water etc....not even once. I sort of resented that Honda didn't tell me they were considered a CRA. 1 single day of debt to them hurt my mortgage scores for 7 years, might have even been 10 years...how is that right?