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Installment loans as opposed to revolving credit


Ravenous Wolf
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Here is a quote from the Experian web site:

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Do finance companies have a negative impact on my score?

The presence of a loan finance account can negatively affect your score because many lenders negatively view installment loans, which often carry high interest rates (which may hamper your ability to repay). However, in some instances, these accounts, when paid on time can also have a positive affect on your score (if the loan helps you to make your payments in a more timely fashion for example.)

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How does a CRA differentiate between a finance company who is a loan shark that charges like 33 percent or 88 percent as opposed to my credit union that charges 9 percent interest for a signature loan?

Why do the CRAs get a hard on when it comes to revolving accounts especially since many of them charge like 23 percent interest as opposed to my credit union and bank installment loans that charge low interest rates?

Do the CRAs or Fair Isaac have something against installment loans?

The reason I am curious is because when there is something I want to buy, I would rather get a signature loan with a nice interest rate and then pay it off in 12, 24, or 36 months. That way, the transaction is closed forever instead of having an open revolving account with a high interest rate.

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On business viewed credit reports - the KOB (kind of business) is identified. So they will know if it was personal finance or a bank / credit union that holds the account.

Specifically they think bad credit is related to the personal finance companies - they are just the same as revolving accounts in respect to the high interest rates you get charged. So if you are able to get loans with the banks / credit unions - you are obviouly more mindful of your credit & have lower rates as a reward resulting.

The CRAs & credit scoring system will reflect the better credit practices of the consumer if you are using the best options available to you as you go.

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Other than Fair Isaac and the CRAs giving us the chorizo, why don’t credit reports show us all the codes to every trade line? The most informative CR is from CSC since it shows the actual rating like R1 or I1.

Why are the credit reports that businesses view so much more detailed than the ones that a Joe Schmoe like get in the mail.

Years ago, I remember Fair Isaac spouting off some kind of [EXPLETIVE DELETED] that the public would never be able to understand their FICO score or many of the mechanics of the score calculation itself. Fortunately, pressure from Congress and state legislatures changed that.

I still don’t understand why Fair Isaac puts such a high value on revolving credit?

Many of my credit factors consistently say:

Length of oldest revolving account established is too short

Not enough retail accounts…

Completely paying off something in 12, 24, or 36 months with an installment loan at a low interest rate sounds like better financial management than having a high interest revolving account open indefinitely (even with a zero balance, you still have to pay rather high annual fees).

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Businesses are using various tools for different reasons:

Employment Reports: will contain disclaimer that the reports are for employment purpose only. Consumer is always entitled to a free copy approved or declined. Also entitled to the summary of rights.

Collection Reports: These are not set up the same as regular credit reports. Will provide contact information to all of the consumers creditors with listing of consumers available credit. There is more to these; but over all I get a headache trying to read them.

Credit Reports: These will show in addition to what you see -

Subscriber Numbers (decode for address & phone number on any tradeline) used to verify directly with each creditor the most up to date account information.

Payment History 24 months (Will show status for each month for 24 months total).

Profile Summary: Will show total number of each type of account; giving total CL / Balance / Monthly Payments / Past Due amounts. And percentage of utilization.

Social Search - this is for skip locating. Entering social secuirity number of a consumer will allow the creditor to get results back of all known addresses / employment / and names used.

SCNL (Subscriber Can Not Locate): Allows the creditors trying to skip trace to have the CRA automatically notify them; or other creditors to report to them if the consumer is located.

Demographics: This can include phone numbers; report if consumer is a home owner; geo code (like when you vote - your are identified by geo code for your location); drivers license...and more.

Data Base purchase: Creditors who want to send out pre-screened credit card offers can purchase mailing lists from the CRAs (listing certain criteria they may be looking for) so to further solicite consumers.

There are so many other products most of which are to help creditors one way or another know your exact utilization; or to somehow locate consumers or other creditors related to the consumer.

Yea; consider the CRAs to be BIG BROTHER - so they pretty much have everything already about any given consumer.

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How does an individual consumer tap into all this information?

Since the CRA gathers this information and sells it to the highest bidder, is there a way for the consumer to actually see all the codes and additional information about him or her?

What the CRA shows me is probably a fraction of all the information they have about me.

Although I don’t view the CRAs as being big brother. I see them as a limited monopoly and master merchandiser selling our personal information to the highest bidder.

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Something else that I find interesting about the various products is that they seem to contain more detailed information that the consumer will never have access to.

Like, it is difficult at best to get contact information about who made inquiry to your credit report. However, the products you described appear to provide to a creditor, everything that would be almost impossible for a consumer to locate.

As for the employment reports, does a consumer ever get a chance to look at them?

Several jobs I have worked at requested to view my credit report. Whenever I called up the CRAs for a credit report, they simply mailed me the credit report that I always get.

It just seems like creditors have much better access to information about the consumer than what the consumer can get a hold of himself.

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The only way to see this information would be if you personally knew a banker willing to pull credit report (then they might not have all the products turned on - to access what you want to see).

Especially the Demographics; I don't see this one often used. Right now I only have one customer even using the service (a hospital - and they are only looking for home owners) for the collection department.

I only have one dealership small that occassionally uses social search for skip tracing. Otherwise - I use social search here; sometimes if something don't look right when initially trying to order a credit report. Social Search has its uses for verifing a persons idenity first before pulling credit report. I have found people this way using false social security numbers. Since this will tell me automatically who owns the social security number.

Now there is a service on the net that can do this as well called accurrant. But it is not pulling data from social security administration like the CRAs use. It goes by subscriptions for magazines and the such to collect their data. It will tell you everyone who has claimed to own a social security number; addresses; phone numbers.

Usually it is just banks using the profile summary; no all of them though. I like this one alot - other than that - the loan officers are just as much in the dark as to the credit scoring. They just know that they have standard for what the score ranges are; no specifics as to why they go by certain pre - set up rules of processing.

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Employment will be just the same as Lenders; it depends if you can talk them into letting you view the existing reports that they have pulled.

Also not all companies pulling credit reports are allowed to see all information that other companies would be able to see.

Example (with Experian)

Banks - will see your social security number; they will also see other social security numbers being reported (indicating if you have a mixed file). On the other hand - Landlords pulling credit reports will not see the social security nubmer confirmation on the credit report.

This is because the CRAs consider the banks at being more capable of protecting your information then an individual landlord would be capable of.

Police Departments are limited also; the only purpose they have to pull credit report is only for employment. If they want for another reason; they have to show us a warrent first - with a judges signiture before we pull credit report.

Also Bankrutpcy Lawyers are not authorized to pull credit reports (since they do not provide service or credit). They try; but only the consumer can purchase the reports needed to itemize all detb being included in the Bankruptcy.

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Only certain limited information with the CRA is affected by the Creditors; the rest like geo code (is automated & accurate as the address listing being current).

Drivers license I think Experian Shows on the Consumer Credit Reports. Phone numbers I just don't know how to change this. And listing of ownership I don't know either. Think they look at what type of loans you have - if their is a mortgage than they will tag you as being a home owner.

The individual creditors who report data have various means for updating the CRAs depending on what they have set up. If electonic through Experian then they will be using Bullseye (update positive data) or Instant Update (update negative data). This is between the regular tapes they send to the CRAs (tapes are spreadsheet programs that have specific fields needing to be completed just right to identify the consumer as well as the tradeline information). Otherwise they wait for the CRAs to contact them - be it mail; phone; may even be e-mail as far as I know.

Also TransUnion & Equifax have the ability to use UDF (Universal Data Forms).

Mind you there has been some major changes especially with Experian. Not all creditors having reported prior can now update the CRAs at their whim for a few reasons. One if company went out of business - then the CRAs need to be notified of this so that all data reported can be wiped out). If they reported manually (mailing or faxing data) they are no longer allowed to update this way. So some get cut; and have to wait for consumer to initiate dispute directly with the CRA first & then they wait for the CRA to contact them - giving the open they need to set the matter straight. Another thing is that some creditors have less then the required number of customers to continue reporting. 500 is the cut off; so the CRA will no longer accept them updating. Again the consumer will have to dispute directly with the CRA first to get the ball going.

So creditor have problems at time with the CRAs just like the consumers have problems. They are not easy one way or the other to deal with.

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I have always understood that there are an enormous number of intricacies involved in credit reporting from the creditor to the CRA but I have never found any detailed literature explaining what really goes on.

And if there is a creditor who is a bonehead, then the consumer is really screwed. One bank gave me the chorizo and they didn’t even bother to put any manteca on it. Since I paid off a loan early this past December, I didn’t want to wait like sixty or ninety days for the CRAs to show it as paid in full. I often times dispute the trade line with the CRAs so I can get the paid in full reported faster. Since the bank didn’t respond in 30 days, Trans Union simply dropped the entire credit history.

Calling up the bank was a nightmare. I couldn’t believe the number of boneheads that worked at my bank. They insisted that Trans Union had to be the one contact to them and initiate the correction. I called up Trans Union and they told me outright that there is no way they can make an investigation on something that has already been deleted. From Trans Union’s point of view, that makes since, like how can they investigate something that no longer exists.

I spoke to bonehead after bonehead at my bank and each bonehead insisted that they are going to wait for Trans Union to contact them before they can put my credit history back on my credit report. I finally sat down with a bonehead loan officer and she called up Trans Union and was shocked when the Trans Union rep regurgitated everything I told them. Then it was an interesting set of fireworks to watch this loan officer go against every bonehead co-worker to try to get this corrected. That was in January. Today is May and my credit history still has not been re-inserted into my Trans Union credit report.

If the creditor doesn’t know what the hell is going on, much less will the consumer be able to correct anything.

Since you have a wealth of knowledge on the intricacies of credit reporting, perhaps you ought to write a book explaining the mechanics of all the products and procedures used. Maybe call it, Good Credit Will Help You Get Laid…

Seriously though, I have plowed through dozens and dozens of titles in Barnes and Nobles and most of the books are out of date and full of [EXPLETIVE DELETED]. I have not seen anything out there that explains the level of detail that you just described.

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TransUnion: the Bank can use a UDF form. All they have to do is complete the tradeline information on the form & fax to a special number.

UDF is a one time update (in this case; this won't be a problem since the account is paid & won't require any further updating).

If you want e-mail me; what I need would be the banks phone number & contact name of a person there you have been working with.

Will just take a bit of education lesson on their part & I can provide them with the UDF form & instructions on how to complete this for the tradeline to be added back to your credit report.

I run into this often enough; that CRAs memebers are not educated in how to contact them on certain matters to fix things - so they don't know no better & think the matter is out of their hands (not totally their fault) just a lacking system for education.

** The business side is just as uneducated to the consumers problems as the consumer is uneducated to the business problems. And both business & consumers don't understand the credit reporting agencies period! I wish I had the ability to bridge the gap between all 3 sides - but I only work for a credit bureau (always in the middle seeing everything - and not being able to fix everything) can be flustrating at times.

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