Store finance appeared on my file as unsecured loan including the amount

Fedcas65

Hello,

I did a finance with a store, I knew that the hard credit check was required to apply after the evaluation, but what made me angry is that this finance company reports the amount to the credit agencies.
Normally, these finances not done through the banks report the account creation, but not the amount, because usually the monthly fee is insignificant, I’m pretty sure that this will heavily impact my possibility to get whatever credit in future, it’s around 3k and that’s the amount I didn’t want to see there.

I believe I’m forced to settle the account asap, despite I have perfect credit history, and this one was approved after a mortgage.

Right after, I also got 2 credit cards increases and another 1k finance for another product, it doesn’t seem they bother too much with it, but we all know that the “amount” will make a difference.

Interestingly, on Credit Karma it says that the amount is not used to score people by the banks, it seems just an arbitrary label, so I wonder if anyone knows more, thanks.

Brie

I'd be surprised to find a store finance deal that didn't appear on one's credit reports.  And it makes sense that it's an unsecured loan and the amounts owed should show.  They do for everything else.  

If you do settle the account quickly that may very well work in your favour as it shows you know how to deal with creditors in a positive way.

BikingBud

Fedcas65 said:

Hello,

I did a finance with a store, I knew that the hard credit check was required to apply after the evaluation, but what made me angry is that this finance company reports the amount to the credit agencies.
Normally, these finances not done through the banks report the account creation, but not the amount, because usually the monthly fee is insignificant, I’m pretty sure that this will heavily impact my possibility to get whatever credit in future, it’s around 3k and that’s the amount I didn’t want to see there.

I believe I’m forced to settle the account asap, despite I have perfect credit history, and this one was approved after a mortgage.

Right after, I also got 2 credit cards increases and another 1k finance for another product, it doesn’t seem they bother too much with it, but we all know that the “amount” will make a difference.

Interestingly, on Credit Karma it says that the amount is not used to score people by the banks, it seems just an arbitrary label, so I wonder if anyone knows more, thanks.

Not really sure what your issue is.

You have taken unsecured debt £3k and it appears on your credit report. The monthly amount might be insignificant but to some £3k is certainly not, perhaps your debt/earnings ratio may support your assertion. 

Alongside that new debt you have increased 2 off credit card limits and added another £1k product. 

Score means nothing but actions and habits do. All this recent activity might indicate someone losing control of their outgoings and would be the pattern that triggers lenders to reject further applications.

CliveOfIndia

Fedcas65 said:

I did a finance with a store, I knew that the hard credit check was required to apply after the evaluation, but what made me angry is that this finance company reports the amount to the credit agencies.

What made you think that it wouldn't be reported to the CRAs?  It's a loan, simple as that, and the loan is being reported just like any other credit agreement.

Fedcas65 said:

I’m pretty sure that this will heavily impact my possibility to get whatever credit in future, it’s around 3k and that’s the amount I didn’t want to see there.

The outstanding balance will be factored into affordability calculations for any future credit applications.  Whether it will "heavily impact" your chances of acceptance, no-one can say - it'll depend on your level of income, your level of outstanding debt, and the lender's individual criteria.

Fedcas65 said:

I believe I’m forced to settle the account asap

Why do you believe that?  Yes, if you're able to settle the loan early then you'll save yourself some interest.  But as long as you're making your contractual payments every month, it won't have any negative effect on your credit history.  As I said, the outstanding balance will be taken into consideration - but an extra £3000 of debt may be trivial or substantial, depending on your personal finances.

Fedcas65

These finances have no interests, so I thought they were agreement in house, or whatever they call it.
The 3k one has monthly payments, the 1k finance has “freedom”, after a certain period interests kick in.

I was only expecting to see the account reported there, but not the amount.

The reason for settling asap is that I may need finance for important things, like a car, I don’t think I’ll ever get one if I don’t close the previous one, then there is always the 2 months delay to report to the agencies, so the total waiting time from today is quite long, let’s say 6 months, quite annoying.

I didn’t request for a loan specifically, it was supposed to be a payment agreement between me and the stores, but I see that the jargon played with me . 

Also the employee told me that it shows up on the credit file only if I miss a payment or if I start to pay interests, I see he had no idea  

DullGreyGuy

Fedcas65 said:

I didn’t request for a loan specifically, it was supposed to be a payment agreement between me and the stores, but I see that the jargon played with me 

Thats the definition of a loan, you get ownership of goods or money that you cannot afford up front and reimburse them over time. 

CliveOfIndia

Fedcas65 said:

These finances have no interests, so I thought they were agreement in house, or whatever they call it.

Ah, OK, fair enough, I can kind of see why you may have misunderstood.  But the key point is that it is still a loan, albeit one that's charging 0% interest, and as such will be reported on your credit file.

As a slight aside, I'm always a little sceptical of such deals.  Ultimately someone is paying for the loan somewhere along the line - the cynic in me can't help thinking that they charge more for the goods in order to cover the cost of the finance.  But that's slightly off-topic.

Fedcas65 said:

Also the employee told me that it shows up on the credit file only if I miss a payment or if I start to pay interests, I see he had no idea  

With all due respect to the employee, it's entirely possible that he doesn't understand how the finance offerings work - he was probably just relaying information that was given to him incorrectly in the first place.

Fedcas65 said:

I didn’t request for a loan specifically, it was supposed to be a payment agreement between me and the stores, but I see that the jargon played with me

Yes, it's sounds like a simple case of misunderstanding the semantics.  You can call it what you like, ultimately it's a loan, pure and simple.

Fedcas65

If I knew it was reported in this way, I would have paid right away, if I pay now in bulk, I need to wait for 6 months to make sure it clears up from my file, that’s the only issue, I guess car finance will need to wait a long time, or maybe leave it there.

MattMattMattUK

Fedcas65 said:

If I knew it was reported in this way, I would have paid right away, if I pay now in bulk, I need to wait for 6 months to make sure it clears up from my file, that’s the only issue, 

What do you mean by "clears up from my file"? On the live side that businesses see it will show as satisfied within a few days.

Fedcas65 said:

I guess car finance will need to wait a long time, or maybe leave it there.

Unless you are on the edge of affordability it is unlikely to make much difference. Now personally I would not buy a car on finance, but the reality is a bit of store finance, either live or satisfied is unlikely to make much difference.

BikingBud

MattMattMattUK said:

Fedcas65 said:

If I knew it was reported in this way, I would have paid right away, if I pay now in bulk, I need to wait for 6 months to make sure it clears up from my file, that’s the only issue, 

What do you mean by "clears up from my file"? On the live side that businesses see it will show as satisfied within a few days.

Fedcas65 said:

I guess car finance will need to wait a long time, or maybe leave it there.

Unless you are on the edge of affordability it is unlikely to make much difference. Now personally I would not buy a car on finance, but the reality is a bit of store finance, either live or satisfied is unlikely to make much difference.

Car finance might still offer opportunity but like all other things financial you need to undertake your own due diligence, understand the product and understand how you might exploit it for your benefit.

Taking a large discount or deposit for going onto finance but settling immediately was and might still be a route to a significant saving. As no discounts are offered for cash this should not be excluded before considering if it suits you.