Can someone explain Financing to me

[TubsAlwaysWins]

So obviously I get what financing is. Instead of paying full price for something you agree to pay X dollars a month for Y months with Z interest. 

 

Does financing anywhere affect my credit score? Example: If I finance a laptop with dell would that do anything to my credit score? 

Im 18 with no credit built up, just because Ive never gotten a credit card or anything. Im looking to get one to pay for gas since I always have money for that. Just wondering if financing things like that with low to no interest would do anything, especially because I know I will always have money for it. 

 

Not sure if that made any sense.

TL:DR: will financing anything, anywhere effect my credit score? Or is that like only through banks and stuff

[Arika]

depends on their reporting requirements.

 

But generally the more "financing" you do, the more things will show on your credit report. for small transactions (like a laptop) paying them off will improve your score very little if at all, but failing to make a payment will drop it hard.

 

You would be better off building credit with a credit card and only spending money that you have in a saving account and pay it off completely EVERY month

[TubsAlwaysWins]

1 minute ago, Arika S said:

depends on their reporting requirements.

 

But generally the more "financing" you do, the more things will show on your credit report. for small transactions (like a laptop) paying them off will improve your score very little if at all, but failing to make a payment will drop it hard.

 

You would be better off building credit with a credit card and only spending money that you have in a saving account and pay it off completely EVERY month

Good to know. Thanks!

 

Ive never really had credit explained to me, other than I know it can screw you over later if you are trying to get a loan on something. 

[Arika]

10 minutes ago, TubsAlwaysWins said:

Good to know. Thanks!

 

Ive never really had credit explained to me, other than I know it can screw you over later if you are trying to get a loan on something. 

it absolutely can. just don't treat it like free money and you'll be golden.

[KuJoe]

Back in the day having a cell phone plan in your name would help you build credit, that's probably the easiest thing to do to start establishing credit since if you don't pay it on time you're disconnected from the rest of the world so it should never happen.

[lukepwnsall]

So for the most part, in all cases of borrowing money to pay for something will report to a credit report (experian, transunion or equifax). So when you finance through dell, you really would finance through Dell Financial Services (DFS) which is a separate company owned by dell. They would report this to your credit report as a loan or revolver (not sure exactly how dell does it). The more things reported to your credit report, the more your credit report is considered thicker. A credit score is a good indicator but isnt the only factor in making a lending decision. For example someone with a credit score of 700 and has 1 car loan and 2 credit cards for 5 years, would probably have a better chance at approval versus someone who has a 780 credit score and only 1 credit card for 1 year. because there is more history to them.

I dont think i even answered what you are looking for, but if you look for a website called myfico (they make the FICO scoring model), theres a lot of info on credit and financing and all the things that can be learned about. As someone who holds a BSB finance and works for a bank in the underwriting department. credit is complicated good thing, but always know what your getting yourself into and never go beyond your means. I always recommend that someone who is 18 and has consistant income should get a small credit card or loan like through dell to start building their credit. Credit i believe is something that needs to be taught more in schools, so that consumers can save money and understand how to get some good rates. also theres still some predatory shit out there (like best buy financing) that i believe shouldn't be out there and can catch people by surprise.


as a side note as i reread your question. Interest rate only affects how much you pay, having a higher or lower interest rate will not affect the credit score itself.

[TubsAlwaysWins]

12 hours ago, KuJoe said:

Back in the day having a cell phone plan in your name would help you build credit, that's probably the easiest thing to do to start establishing credit since if you don't pay it on time you're disconnected from the rest of the world so it should never happen.

You know if that still applies? Lol. I just moved to my own plan

[TubsAlwaysWins]

12 hours ago, lukepwnsall said:

So for the most part, in all cases of borrowing money to pay for something will report to a credit report (experian, transunion or equifax). So when you finance through dell, you really would finance through Dell Financial Services (DFS) which is a separate company owned by dell. They would report this to your credit report as a loan or revolver (not sure exactly how dell does it). The more things reported to your credit report, the more your credit report is considered thicker. A credit score is a good indicator but isnt the only factor in making a lending decision. For example someone with a credit score of 700 and has 1 car loan and 2 credit cards for 5 years, would probably have a better chance at approval versus someone who has a 780 credit score and only 1 credit card for 1 year. because there is more history to them.

 I dont think i even answered what you are looking for, but if you look for a website called myfico (they make the FICO scoring model), theres a lot of info on credit and financing and all the things that can be learned about. As someone who holds a BSB finance and works for a bank in the underwriting department. credit is complicated good thing, but always know what your getting yourself into and never go beyond your means. I always recommend that someone who is 18 and has consistant income should get a small credit card or loan like through dell to start building their credit. Credit i believe is something that needs to be taught more in schools, so that consumers can save money and understand how to get some good rates. also theres still some predatory shit out there (like best buy financing) that i believe shouldn't be out there and can catch people by surprise.


as a side note as i reread your question. Interest rate only affects how much you pay, having a higher or lower interest rate will not affect the credit score itself.

Ill go check that website out. Thank you!

[lukepwnsall]

1 hour ago, TubsAlwaysWins said:

You know if that still applies? Lol. I just moved to my own plan

No cell phone payment history isnt on your credit report, unless your account goes into collections. They dont put positive phone/utility payments on credit reports only negative information like collections