Finance Review

It seems simple. But it is not in fact. Thousands are opening up new financing companies each day and some may not know that they are doing it. But taking advantage of “in-store” credit offers is already a way of financing. This is what is sometimes called indirect lending. In effect the customer is applying for credit in a store but a completely different company is extending credit. Indirect lending is most common in the automotive industry.

In case of in-store credit, the biggest culprits are the big box electronics retailers and furniture showrooms. When applying for their credit and you take advantage of “same as cash” offers, you are actually applying for credit with a completely different company. And in many cases, that company is a financing company.

If your application is approved, you will be walking away with a brand-new TV set, a dining room table and a brand-new financing account that will show up within 30 days in your credit report and your credit scores will suffer because of it.

This is completely legal and, in fact, the customer agreed to it when he signed the credit application. Most people do not read the fine print but it most indirectly identifies the indirect lender by name.

So what to do about it when you have been a victim? There is not much the customer can do about it. Even if he has an old financing company account that has already paid a long time ago, the mere fact that you have can still hurt the credit scores.

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