What are consumer finance accounts?

[GregB]

Mustanglvr,

I didn't mean to be critical of your answer but reading it after the fact it reads like I was. Please accept my apology.

Your answer is correct in the meaning of the word in general. I made an assumption based upon the question being in the "Understanding FICO Scoring" forum.

I was referring to the FICO specific negative when your credit report contains "consumer finance" accounts. FICO seems to have chosen a very narrow meaning of the term.

[Mustanglvr2006]

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@GregB wrote:

Mustanglvr,

I didn't mean to be critical of your answer but reading it after the fact it reads like I was. Please accept my apology.

Your answer is correct in the meaning of the word in general. I made an assumption based upon the question being in the "Understanding FICO Scoring" forum.

I was referring to the FICO specific negative when your credit report contains "consumer finance" accounts. FICO seems to have chosen a very narrow meaning of the term.

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Please don't be sorry Greg, I did not take your reply as being critical, not one bit.

I am just happy that you did reply and answer the OP's specific question, while I was researching the answer, I did not take into account his specific question regarding "What are CFA's by FICO".

I am also glad that you replied, because I learned something from your reply, and that's one of the reasons I'm here, is to learn, I am also here to try and help others when I can, unfortunately, I can't be right 100% of the time, and it's Members like you that are a vital part of my learning process.

I do greatly appreciate your last reply, that reply just shows your respect for others on this Forum, and I feel that I owe you a Thank You, for providing the specific answer that the OP was looking for, as it taught me something as well.

Thank you again Greg.

[Hannah1787]

Our credit union offers a "FICO" score monthly via only banking services. For the first time, it says:

"You recently opened a new credit account." - I have not.

"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."

I don't have anything new I've opened - I'm confused as to what this is? We have good credit and relatively low rates, what on earth is this? We do have a Home Depot card with no balance on it - could that cause this? We've had the account for ages.

[GregB]

That sounds like exactly what is happening.

For some reason, the HD account is now being reported as a consumer finance account.

[MattH]

A few years ago my wife and I financed a new A/C compressor for our residence through Carrier (the manufacturer) because the terms were quite favorable. Only afterwards did I realize that because the financing came from Citifinancial (the "consumer finance" division of Citibank), this was treated as a CFL for FICO scoring. Fortunately, on an otherwise clean history one Consumer Finance Loan is a very minor ding. The mailing address for Citifinancial was different from their prime credit card operations, as my wife and I both noticed. She and I both have individual Citibank credit card accounts that were estabished in the 20th century, so the mailing address for Citibank's prime cards was very familiar to us. Today, she and I both pay our Citi bills electronically so it has been a while since either of us sent any snailmail to Citibank, today I have forgotten their mailing address.

[wldhrses]

Just my two cents, I've been trying like crazy  the past 6 months to get get my score up just 5 points to get into the best mortage rates with little success. My report is spotless, my use of unsecured credit at 1%, and I only have a car payment at the credit union. Amongst other revolving credit cards (Amex, chase, zero balance) I also have an HSBC card. It only had with a $200 balance with a low rate, so I figured I'd pay that off last. What I found out according to MyFico after paying it off, was it was considered a 'CFC'. My score went up 22 points!! Reasons my score changed from MyFico?...'your consumer finance account is not hurting your score as much as before'. Keep in mind that I've never been late on any account, but bringing this account to $0 gave me a 22 point bump. Go figure...