Anonymous
Anonymous asked in Business & FinanceCredit · 9 years ago

what are some examples of consumer finance companies?

I have been told to buy something on installment plans to help establish my credit.

I have one credit card with a small balance for 6 months.|

I have also be recommended NOT to use consumer finance company for the installment loan.

I'm kinda confused- what are consumer finance companies?

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  • 9 years ago
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    "Consumer finance companies" are different types of companies compared to regular banks and credit unions. A consumer finance company is typically for those who have bad or no credit and cannot get approved for a loan with their bank or credit union. Consumer finance loans generally have much higher interest rates then loans offered by regular banks and credit unions.

    Several examples of consumer finance companies is OneMain Financial (formerly known as CitiFinancial), Wells Fargo Financial and 2nd Chance Finance (notice the word Finance/Financial in the companies names)

    While those types of creditors do serve a purpose for those who cannot get loans through regular channels, I wouldn't recommend going with them simply to try to boost your credit scores. Plenty of people who do use a finance company for a loan will often find a notation on their FICO scores stating that the reason their scores aren't higher is because they have a consumer finance account on their reports.

    As for installment loans through regular banks or credit unions, a person needs to be careful to not have too many (opened or closed) installment loans on their reports. FICO often gives the reason of "too many installment loans on your reports" as a reason why your scores aren't higher.

    Not only have I heard other people say that's what FICO tells them, for myself I have scores over 800 and two installment loans reporting on my credit reports. One of the installment loans was closed, in good standing, 'more than two years ago', the other is currently open and showing paid as agreed .. yet FICO tells me that my scores would be higher if I had fewer installment loans reporting (which is the only negative reason FICO gives me for why my scores aren't higher).

    Also, loans (other than a mortgage) do not carry as much weight in scoring as credit cards do. Your best option, if you're trying to build credit, is to get another credit card. Typically for those beginning to build credit, or rebuilding credit, the credit limits will probably be low. But as time goes by and the cards begin to age then there's always the chance of getting credit limit increases on the existing cards. And, eventually when the cards have some age on them and they've been kept in good standing you'll probably be offered better/higher credit limits on any future credit card approvals.

    Source(s): creditboards.com
  • ?
    Lv 4
    4 years ago

    Consumer Finance Companies

  • Anonymous
    6 years ago

    Pretty sure that you must find every financial clarification at: loandirectory.info-

    RE What are some examples of consumer finance companies?

    I have been told to buy something on installment plans to help establish my credit.

    I have one credit card with a small balance for 6 months.|

    I have also be recommended NOT to use consumer finance company for the installment loan.

    I'm kinda confused- what are consumer finance companies?

  • 9 years ago

    Let me guess, a bank told you to carry balances.

    Banks will lie, lie, lie to make money. Never trust a bank.

    That one credit card is all you need.

    Use it for something small you need like gas and pay in full each month.

    That way you never pay interest and develop amazing credit.

    It is 100% myth that you need to carry balances for good credit.

    And an installment loan is not going to benefit your credit.

    (not worth paying interest for).

    Better plan: Work on your 6 months worth of emergency fund in savings.

    In the future if you need a loan a bank will ask and verify.

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  • 9 years ago

    skip that advice the person has no clue what they are talking about. and carrying a balnce is never smart for any reason

    Best cheapest way to establish credit is a secured bank loan pay off over 7 months and repeat until you can get an unsecured one.

  • 4 years ago

    As for installment loans through regular banks or credit unions, a person needs to be careful to not have too many (opened or closed) installment loans on their reports. FICO often gives the reason of "too many installment loans on your reports" as a reason why your scores aren't higher.

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