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Does dealing with subprime lenders lower score?


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Hi,

I wanted to know if simply having tradelines (in good standing) from subprime lenders lowers your credit score. I'm concerned because I've obtained a CC and a line of credit from Wells Fargo Financial for the sole purpose of building my credit history.

An Excerpt from http://www.epic.org/privacy/creditscoring/

"If an individual has a subprime loan on their credit report, it can damage their credit score. The lower score, in turn, attracts more subprime loans, resulting in a vicious cycle."

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It will not lower your FICO score (as far as I am aware).

However, using subprime lenders can affect your eligability for a loan that actually passes through an underwriter, such as a home loan. Lenders can set their own guidelines for approval in underwriting and some of them will not look kindly upon applications/bureau-reports that contain sub-prime lenders. Why is up for speculation. But I believe that they look at it as a risk for a couple of reasons:

*They may view use of subprime lenders as a sign of desperation to obtain credit.

*They may view use of subprime lenders by people with otherwise good credit as a sign of poor financial judgment.

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So I should probably close those accounts...

Would it make a difference if I closed them right away or if I closed them after a couple of months?

I don't expect to ever use them, but want to keep them around just in case.

I hope the fact that I've never used them won't be lost on my future creditors...

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Wow, I had no idea !! I figured as long as you are paying all accounts on time, the playing field was equal. How awful to be continuously punished. It is insane. My car is financed through WFF and I thought just getting financed was awesome, now I am learning it is actually harming me.

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  • 4 weeks later...
Wow, I had no idea !! I figured as long as you are paying all accounts on time, the playing field was equal. How awful to be continuously punished. It is insane. My car is financed through WFF and I thought just getting financed was awesome, now I am learning it is actually harming me.

Not all credit is the same. Finance companies are predatory lenders and WFF is one of them. They charge outrageous interest rates. WFF always charged me in the 30 percent range even though their advertisements to me said that their loans were bill's consolidation loans.

Other predators charged me as high as 88 percent.

As you can see, these rates give you the big chorizo. And the FICO score penalizes you for using them which is something that I actually agree in.

But as your credit score improves, you got to get rid of these predators and find outfits that will charge you reasonable rates. That is one of the big reason why the public forced the credit bureaus to allow consumers to see their own credit scores. In the past, the credit bureaus would tell you to go [EXPLETIVE DELETED] yourself if you wanted to know what your score was.

You could have a good score and never know it and still be stuck with these predators only because you thought that your credit sucked big green donkey [EXPLETIVE DELETED].

Check out this web site:

www.CreditUnionAccess.com

It has all the credit unions in your local area including the national ones. And you can even apply for a loan before becoming a member. Just talk to their loan department first since most of them will let you do that.

And if they turn you down, then wait another year and try again...

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