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What is a consumer finance account?


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Experian says that my Fico Auto Score 8 at 638.

Also Fico Score Auto 2 at 654 are being held back because of a consumer finance account, is this like personals loans?

 

I do have loans but there paid off as agreed. Just trying to really figure out why my scores don’t improve.

 

Late payment was August of 2018 and none since, thank God.

Edited by Killbadcredit
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Posted (edited)

Thanks legal eagle, I have some furniture paid off, personal loans paid off, and even my home smart cameras are financed by Fortiva.

 

Anyway, I can improve my scores even with having these?

Edited by Killbadcredit
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8 hours ago, Killbadcredit said:

Experian says that my Fico Auto Score 8 at 638.

Also Fico Score Auto 2 at 654 are being held back because of a consumer finance account, is this like personals loans?

 

I do have loans but there paid off as agreed. Just trying to really figure out why my scores don’t improve.

 

Late payment was August of 2018 and none since, thank God.

 

When it comes to FICO scores, "consumer finance account" is a reference to a specific type of financing;  it's a term used to refer to lending by "consumer finance companies" who predominantly engage in higher risk/higher rate consumer lending.

 

I have one such account that kicked off the "consumer finance account" flag on my myFICO score report ... Affirm.  I tapped the finance option to pay for an online purchase over 3 months with no finance charge, simply curious about its novelty.  I had no idea that in doing so I would incur a modest FICO score penalty.

 

As this suggests, the presence of such an account on your report triggers a FICO score penalty.  The magnitude of that penalty is likely fairly small, particularly if you otherwise have a well rounded credit portfolio.  (I imagine that the hit is harder on those with few tradelines comprised solely of revolving accounts.)

 

One can infer the FICO scores the account negatively out of the concept "birds of a feather flock together".  While there are good reasons why a strong credit worthy borrower might avail themselves of an Affirm account (as I did), the majority of their business and profit is associated with higher risk/rate products.  FICO scores on statistical correlation, thus if Affirm customers (or CFA customers in general) are more likely to default on credit obligations, then as a customer of Affirm yourself you're tarred by the same brush.

 

FICO recognizes that this isn't an iron clad relationship, but it's one that has some predictive value.  As such, the score hit tends to be modest.  And, any such impact will diminish with time until the account drops from your report at 10 years post closure.  (If I were more concerned, I might ultimately argue with the CRA that because the account carries a FICO score penalty, it must be considered as having an adverse status under the FCRA and should be removed 7 years after the account established ... not sure that would get traction, and in any case, I'm not concerned.)

 

It might be tempting to engage in efforts to manipulate the reporting so as to remove the account early.  I'll suggest that such tactics bear risk in themselves and it's best to treat the account as a "nit" and let it be.

 

You can confirm that relatively light impact the CFA score factor has by observing where it lies in the list of myFICO "negative score factors".  For my scores where this is listed as a factor, it's relegated to the #3 or #4 (of 4) reason.  Definitely small potatoes in the scheme of things.

Edited by hdporter
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  • 4 weeks later...

I sometimes get the "too many consumer finance accounts" score factor on some FICO models, and there's no apparent reason. 

 

Closest thing I have reporting is a Macy's store card.

 

Don't worry about it, in the real world there is no practical consequence.

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4 hours ago, cv91915 said:

I sometimes get the "too many consumer finance accounts" score factor on some FICO models, and there's no apparent reason. 

 

Closest thing I have reporting is a Macy's store card.

 

Don't worry about it, in the real world there is no practical consequence.

 

 

"TMCFA" may just be the credit slut's version of a "cold sore" ...

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5 hours ago, hdporter said:

 

 

"TMCFA" may just be the credit slut's version of a "cold sore" ...

 

I want to go on the record as stating that I've never gotten a cold sore from an encounter at Macy's.  

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20 hours ago, Killbadcredit said:

Apparently did t know that consumer finance accounts was viewed as bad.

 

I was just trying to build credit, go figure. 

That is RARELY going to be the sole reason given for a denial or why a score is low.  Sort of like when Inquiries are cited.  It is usually a third or fourth item on an adverse action notice...

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6 hours ago, cv91915 said:

 

I want to go on the record as stating that I've never gotten a cold sore from an encounter at Macy's.  

 

Now, JoAnn Fabric... that's a different story.

 

Warning:  Aired on TV but may not align with your sensitivities.  Click AYOR.

 

  

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11 hours ago, cv91915 said:

I sometimes get the "too many consumer finance accounts" score factor on some FICO models, and there's no apparent reason. 

 

Closest thing I have reporting is a Macy's store card.

 

My experience is that DSNB didn't trigger the "consumer finance" comment.  Sure you don't have another relatively obscure account issued by an entity that also engages in consumer finance lending?  For me, Affirm was the culprit.

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3 hours ago, hdporter said:

My experience is that DSNB didn't trigger the "consumer finance" comment.  Sure you don't have another relatively obscure account issued by an entity that also engages in consumer finance lending?  For me, Affirm was the culprit.

 

Potentially sketchy:

 

- Macy's store card (open)

- Discount Tire store card - Synchrony (closed)

- Express store card - Comenity (closed)

 

Also:

 

- Secured credit union installment loan from way back when I met you fine people (closed)

 

Aside from that, just a thousand M/V/AE/D, a collection of open/closed mortgages, two open HELOCs, two closed auto loans and my current car lease.

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3 hours ago, cv91915 said:

 

Potentially sketchy:

 

- Macy's store card (open)

- Discount Tire store card - Synchrony (closed)

- Express store card - Comenity (closed)

 

Also:

 

- Secured credit union installment loan from way back when I met you fine people (closed)

 

Aside from that, just a thousand M/V/AE/D, a collection of open/closed mortgages, two open HELOCs, two closed auto loans and my current car lease.

 

 

All I can relate is that until I did a "why the hell not" retail purchase through Affirm, the presence of DSNB/Synchrony/Comenity on my report didn't trigger the "too many consumer finance" comment.

 

Seems to me that among your M/V there were at least a couple of "oddball" cards.  No chance one or more of those are flagged as also being a "consumer finance" lender?

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3 hours ago, cv91915 said:

⬆️

 

Fun fact from that credit report review:

 

The sum of my last 13 car lease payments is 20 times our current mortgage balance.

 

:lol: 

 

I had the sense that our Holloween candy budget was larger than your outstanding mortgage balance ...

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3 hours ago, hdporter said:

All I can relate is that until I did a "why the hell not" retail purchase through Affirm, the presence of DSNB/Synchrony/Comenity on my report didn't trigger the "too many consumer finance" comment.

 

Seems to me that among your M/V there were at least a couple of "oddball" cards.  No chance one or more of those are flagged as also being a "consumer finance" lender?

 

PayPal Extras MC

Rack-U-10 Visa

 

There are also two credit union credit cards, one open (PennFedd) and one closed (Enneffseeyou), but those wouldn't trigger the "consumer finance" flag, although they do make me look stupid and desperate.

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13 hours ago, cv91915 said:

 

PayPal Extras MC

Rack-U-10 Visa

 

There are also two credit union credit cards, one open (PennFedd) and one closed (Enneffseeyou), but those wouldn't trigger the "consumer finance" flag, although they do make me look stupid and desperate.

 

Those are both Synchrony ... I'll throw my hands up as to what's triggering your "consumer finance" account flag.

 

As far as PenFed, I think I take the booby prize with my $500 O/D LOC against a checking account I've never transacted on.

 

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I kid you guys not, I have a few personals loans that helped me report as positive payment. There all paid and never missed a payment t, however Experian says that too many consumer finance accounts are bringing score down, go figure. 

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4 hours ago, Killbadcredit said:

I kid you guys not, I have a few personals loans that helped me report as positive payment. There all paid and never missed a payment t, however Experian says that too many consumer finance accounts are bringing score down, go figure. 


This is a really minor score factor.  
 

My FICO 8 is at 850 more than it isn't lately, yet the "consumer finance" score factor pops up on other score models from time to time.  
 

I also have 2 inquiries under six months old on Experian, and that doesn't stop me from hitting 850 on FICO 8 either.

 

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