EX8 dropped -20 pts after Affirm reported a 3 month installment loan for $180.

[goldfishin]

Affirm just reported my 3 month 0% APR installment loan for $180. The reported balance was $120. It was reported just before the second payment's due date. No missed or late payments; this was my first and only use of Affirm. 

My EX8 dropped 733 to 713 as a result. Probably due to the loan's  effect on my credits age: lowering average age and resetting the age of newest account. Here's my credit before the report:

Accounts: 4

Utilization: 8% of 19k TCL

Oldest account is 15 months, newest is ~6 months

Average age: ~12 mo

5 hard pulls

The Affirm account dropped the average age by 3 months—a 30% drop—and has reset the age of my newest account to 1 mo. I wouldn't really care except that I had been planning on applying for my next card this month, so having my credit age set back by 3–5 months is kinda a bummer, even if the installment loan adds to my score in the longer run. 

When the Affirm installment account closes in about a month, will anything change? Or will the loan still count as my newest account and get factored into my average account age? 

Edit: Good thing I only ever used Affirm once. A reviewer on CK reports having lost 9 years of average account age without realizing it after handful of small 0% APR Affirm offers...  

[Brian_Earl_Spilner]

You probably won't recover everything because affirm will report as a consumer finance account, which is a negative. As long as it's reporting, paid or not, you'll have that penalty. 

[goldfishin]

Really? Wow...I just wanted to see how Affirm worked. Mission accomplished I guess. 

[Zoostation1]

This is where I vomit as usual and take issue with FICO models classifying CFA's as inherently negative regardless of responsible usage or not.  IMO that doesn't matter at all in the grand scheme of things, a CFA like Affirm, Klarna, etc that's paid promptly on time should not be treated as a negative because it was properly used in a responsible manner.  Same goes for auto loans through finance arms of Ford, Honda, etc and so on that are treated as a CFA instead of an installment loan.  To me that's complete BS (you have no idea how bad I wanted to spell it out fully haha) and is inherently wrong.  A consumer paying as agreed should never be penalized because purely because their auto loan was through the finance arm of the manufacturer rather than a "bank".  I don't see how there's even a leg to stand on to justify that one.  End of rant and enjoy the rest of your night.

[Brian_Earl_Spilner]

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@Zoostation1 wrote:

This is where I vomit as usual and take issue with FICO models classifying CFA's as inherently negative regardless of responsible usage or not.  IMO that doesn't matter at all in the grand scheme of things, a CFA like Affirm, Klarna, etc that's paid promptly on time should not be treated as a negative because it was properly used in a responsible manner.  Same goes for auto loans through finance arms of Ford, Honda, etc and so on that are treated as a CFA instead of an installment loan.  To me that's complete BS (you have no idea how bad I wanted to spell it out fully haha) and is inherently wrong.  A consumer paying as agreed should never be penalized because purely because their auto loan was through the finance arm of the manufacturer rather than a "bank".  I don't see how there's even a leg to stand on to justify that one.  End of rant and enjoy the rest of your night.

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I agree with this. A person shouldn't be penalized for using alternative financing. Punishing someone for using captive financing just blows my mind. It's not like someone with poor credit can get 1.9 or 0% financing. 

[GApeachy]

From what I've googled I take it that.....

it's the only negative account that Fico reports for 10 years? 

it's the only positively paid account that gets fico points automatically deducted for the life of its reporting?

Fico can't deduct points for certain demographics say by address, age, etc .....no discrimination..... yet it seemingly  discriminates certain types of loans used most often by a certain demographic.....is that a fair statement?

[md_rebuild]

Agreed, I didn't realize this either, until I had 3 loans.   Only 1 is showing on my CRs, but I don't see what the negative impact is.   It should be treated as any other loan.   I could have taken the $500 and put it on a CC that charges 18% and paid it off over 5 months, but instead I went with Affirm at 0% (which makes more financial sense!!!) and for that I'm punished?

I've learned my lesson, no more buy now/pay later loans, but it is extremely aggravating that these are treated as a negative. 

[goldfishin]

Wow, okay--I was totally ignorant of how CFA status affects credit scores.  Just paid off my remaining balance early--not sure if I should also close the account asap or leave it open and see whether Affirm might consider removing it from my report....

The prospects of that seem dim, but some news sources say that Affirm shouldn't be reporting 0 APR 3 month loans if that is the only option offered at check out. I don't remember if I had other options or not...

[JoeRockhead]

I would venture to say that along with the classification of being a CFA, the other thing that's contributed to the 20 point score hit is what they would say is having a high loan balance on the account. Get that balance below 50% and you should start to recover some points. Paying it full and getting it in your rear view mirror would be even better.

[OscarsMom]

@md_rebuild JFYI, AfterPay doesn't show on your credit reports. I am not even sure if they did a soft pull for me. Granted, it's tough to use them some places, like Amazon, but I've used them on Wayfair for a few furniture items. They keep increasing my spending limit too. They don't charge any interest (the merchant pays their fee), so it's better than a credit card, although the standard payments are spread out over only a couple of months. You can apply for 12-month payments, but that does entail a credit check. I don't know if they then report to the bureaus.