finance company question

[ggluvbug]

i was reading my husband's report today, and it said that having finance company tradelines are hurting his credit score. he has 9 of them. they all show good payment with the exception of 1 30 day late in 99. should i try to dispute them off or just leave them. i don't want to lose a potential positive, but i don't want to keep them if they are hurting his score.

i am sure i could get them off because a couple of the companies have gone under and it would be nearly impossible to verify.

what do ya'll think?

[workinninetofive]

I don't know. I just find that interesting. Does it say "such and such FINANCE co?? I'm curious.

[score booster]

Any positive TL is good. While it is true that the FICO model favors banks over finance companies, the difference is negligible. It falls under "types of credit in use". Leave them alone!

[Ahntara]

The answer depends on what your goals are.

Are you just playing around with credit repair, trying to raise scores for some future date? Or are you seriously working to raise scores for a major puchase? If the latter applies to you, then you are chasing points and need all you can get. Under those circumstances, I (respectfully) disagree with ScoreBooster. Having ANY finance company account on your credit causes a deduction (this category accounts for 10% of the scrore-same as inquiries), so having MULTIPLE finance accounts might really be putting a dent. This deduction happens even if the accounts are paid as agreed.

Once again, if you have a big purchase pending, then pay these off by all means. If you can wait until they are paid at end-of-term, then, no biggie. Installment loans are okay once paid, revolving need to be "closed by consumer".

You wouldn't allow random inquiries right before a mortgage loan, so why would you be cavalier with finance company accounts? Limiting and controlling both are part of the basic strategy to raise scores as high as possible so that you can get lower interest rates. (FYI, the other parts are paying everything on time, removing inaccurate/obsolete data and the proper use of revolving accounts) If finance accounts hit you for 10%, 10% of 800=80 points. What if you got 80 points? hint, hint

[ggluvbug]

the info was from a pg report, but it did not name a specific finance company.

my goal is to get our points up as much as possible before trying to get a mortgage. we can get a 90% right now, but need about another 20 points for 100%. i have until August when our lease expires. so i am working to take anything off that effects the credit.

i do want to mention that the accounts were paid as agrees with 1 30 day late on 1. but, they are all older accounts. none in the last 3 years or so.

[Ahntara]

Okay, so you ARE chasing points. It's always good to identify your goal.

You should be able to get your 20 points by paying off those finance company accounts and dinking with utilization. You DO need to find out what account is being identified as a "finance" account. Basically, any that have that word in their name. A few (that I know of) are: American General (finance...), Beneficial/Household, Citifinancial, Wells Fargo Financial (Victoria's Secret or Radio Shack anyone? Shows up as WFFNB (Wells Fargo Finance National Bank/client).

[divemedic]

Remember that PG is a fako score. Chasing the reasons for points on PG is not an accurate way to raise FICO

[Ahntara]

Not to be argumentative...just wanted to clarify.

I'm not familar with PG. The only advice I give is to add points to your actual scores, and the ones I see everyday are through the mortgage industry, so BEACON 5.0, FICO and EMPIRICA. The advice I gave is what I tell clients and is based on general and emphirical data. Those tips work to add points to your score, regardless of where you start at. If you are going to apply for a mortgage loan, you definitely want your score as high as possible to qualify for 100% financing and then to improve program availability and lower interest rates.

There is no substitute for paying everything on time.

Control and limit inquiries

Avoid finance company accounts. Have two revolving and one installment loan for a good mix of credit.

Manage your revolving accounts properly. Mortgage lenders like to see a balance when they pull your credit. So, if you are making a small purchase every month and paying the balance in full, CHANGE THAT 6 months before you apply. Keep a VERY SMALL rolling balance ($5 or $10) so that the lenders will see you are using those accounts. On top of that, getting your utilization between 1% and (AS LOW AS YOU CAN) 9% or 15% (depending who you ask) will add points.

Good luck to you on your new house!

[ggluvbug]

well, they are all paid off, so that is good. one is kentucky finance, citifinancial, personal finance. they each had several loans.

now, i do have to ask about something else. what is "dinking with utilization"?

our cards are at about 70% right now, but we are working to get that down. our biggest problem is a bankruptcy in 1999. and lots of old collections from 2000-2002. we have a car that is paid on time, and a credit card that has 3 years of good pays. he just got a second one in january, so i am hoping that good payments for the next 6 months will help. that would be 3 totally positive tradelines. so we shall see....

[ggluvbug]

Remember that PG is a fako score. Chasing the reasons for points on PG is not an accurate way to raise FICO

i do know that pg is not accurate. look at my signature and my scores are off. but i was going by what they said in the report part.

i pulled fico's in december and i will again in may. that will give me a few months to know where i stand before trying the mortgage thing again.

[workinninetofive]

well, they are all paid off, so that is good. one is kentucky finance, citifinancial, personal finance. they each had several loans.

now, i do have to ask about something else. what is "dinking with utilization"?

our cards are at about 70% right now, but we are working to get that down. our biggest problem is a bankruptcy in 1999. and lots of old collections from 2000-2002. we have a car that is paid on time, and a credit card that has 3 years of good pays. he just got a second one in january, so i am hoping that good payments for the next 6 months will help. that would be 3 totally positive tradelines. so we shall see....

Hi, that's the one that I have lol... your in KY?

[Ahntara]

"dinking' w/utilization is paying those CC's down, FAR DOWN!

Here is an estimate:

75% - 100% Major deducation to your score

50% - 75% Minor deduction

30% - 50% No deduction/No addition

15% - 30% Minor addition

1% - 15% MAJOR ADDITION (yea!, this is what you are aiming for)

0% usage Minor deduction

So, you need to USE THE CARDS EACH MONTH. I've also reads on various boards that people get the most possible points getting under 9%.

[Radio_Guy]

Dear Ahntara,

I hate to barge in like this but may I ask a related Question.

I have heard that you need to get the High balance history section of a cc to about 90% and then take it down to 9% utilization.

- it this true?

Thanks,

[devil21]

Just a thought but I wonder if sometimes people dont get "Finance Company Account" confused with "Factoring Company Account" regarding score hits. I can't imagine a simple name of a creditor could affect your score. Of course, the big JDBs use "Factoring Company Account" as a way to nail your score more than reporting as a Collection Account.

Dunno, just a thought. Might be barking up the wrong tree.

[ggluvbug]

Hi, that's the one that I have lol... your in KY?

[ggluvbug]

Just a thought but I wonder if sometimes people dont get "Finance Company Account" confused with "Factoring Company Account" regarding score hits. I can't imagine a simple name of a creditor could affect your score. Of course, the big JDBs use "Factoring Company Account" as a way to nail your score more than reporting as a Collection Account.

Dunno, just a thought. Might be barking up the wrong tree.

i know mine are finance companies. my sis told me a while back to stay away from them now because they can ding your score.

another question: what is a JDB and what is a Factoring Company Account?

i wonder is household is considered a finance company when it comes to vehicles? it is household auto finance. that is who we have our car loan through.

[workinninetofive]

Hi, that's the one that I have lol... your in KY?

no, they used to be here in mississippi, but they closed up several years ago.

[ggluvbug]

they are the only one that had a 30 day late. that was in 1998. my husband never had a problem with them either.

[workinninetofive]

Ya know, If he doesn't have much other history.. I don't know if I would dispute those companies.

[ggluvbug]

he does have a reasonable amount of history...back to 1992. alot was bad around the time of the finance companies and those were the only positives. i was just wondering because of what i read. i pulled his scores last night and they have gone up anywhere from 9 to 24 points since december. so i am leaving well enough alone. we have 5 months before we want to buy a house. i don't think i want to risk it.

thanks for the response.

[score booster]

The reason finance co. accounts are less highly regarded by scoring models is that they imply a problem obtaining lower interest bank financing. The fact that he has nine of them may be hurting his score marginally, as I opinionated earlier, but what can be done now????? If they're "paid as agreed" should they be deleted, Ahntara??? This would surely drop his score, not improve it. It's impossible to know for sure, but if those nine accounts were all prime bank loans his score might be 9 points higher? 18? Who knows. If all nine got deleted, he'd lose a lot more than that. I have to stick to my guns when I say "any TL paid as agreed is a good one". So you have a finance co loan, a first premier, and a plains commerce card with a good history. Is a new lender gonna know you had problems? You bet. But you've been responsible in managing these accounts, so who's to say you can't manage a new one? You don't always remain sub-prime!

[Ahntara]

scorebuster is correct. Once any installment loan is paid off, especially if always paid as agreed, it is positive credit history and should remain. Why wuold anyone want those to be shielded from view?

(I believe) that open finance company accounts cause the deduction, not paid off ones, like all other installment accounts. The ding comes from having current finance accounts. The NAME is not what generates the deduction, its' the designation, which is not something a consumer sees.

[gdouglaslee]

9 Finance Company accounts? Are you sure these aren't JDB accounts?

So he went to 9 different lenders and borrowed money?

When creditors are manually reviewing your accounts, "Finance Company" is a 4-letter word.

Best thing he could do, if these are not JDB accounts, is to call his bank and consolidate them into one loan. If his bank says no, then keep calling banks until you find one that says yes and if none say yes then start calling credit unions until you find one that will consolidate the loans and if none will then start calling S&Ls.

He's gettting killed by interest payments and any potential creditors that do a manual review will see a man who is deparate for money, had poor credit and extensively indebted himself to legal loan sharks.

[ggluvbug]

no, they are paid finance company accounts. like i said, we had bad credit at the time, and we would borrow money from one, pay it, then need something else. 4 different companies...9 different loans. they are all paid though. all "paid as agrees" except for one 30 day late on 1 account.

[ggluvbug]

now, we are in a situation where we pay on time, don't borrow, and make good money. we want to buy a house but past stupidity has screwed us royally! so now, it is a major uphill battle.