Financing Ashley's furniture dropped my credit score before the payment started by reporting a high utilization up front?

Hi Everyone,

For the past 3 years, I have dedicated myself to repairing my credit. I desperately needed furniture for my new home and decided to finance a dinning room set at Ashley s Furniture through Wells Fargo Bank. I was approved for $2200 and financed $2100 for the dinning set. Wells Fargo added the account to my credit report and I recognized that my credit score went down 71 points. The new account reported that my credit utilization is 98% because the bank reported the price of the furniture as my balance on the credit report/account. The first payment is not due until next month. I am furious and regret opening this account already, as it has drastically hurt my credit score. Wells Fargo is reporting the debt up front and has made it where I have to re-build my credit. Does anyone know a remedy to this? Will my credit score go back to the way it was once I start making my monthly payments? Or should I just give them the furniture back?

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  • 8 months ago
    Favourite answer

    Taking a loan always drops your credit score.

    It will increase in a few months, if you pay on time.  Wells Fargo reported that you owe $2100, because that is how much you owe.

    If you can return the furniture, you should return the furniture.  Not because of your credit score....returning the furniture and paying the loan in full, likely won't increase your score much.

    It wasn't the best move to purchase a $2200 furniture when you don't have enough savings to pay for it outright.  Financing furniture is never a smart decision unless it's 0% financing.

    I'm confident that you could have purchased better quality furniture for less cost, buying it through FB Marketplace or another app.

  • Judy
    Lv 7
    8 months ago

    That's how it works. When you charge almost to the limit. When you get it paid down, if you don't buy more stuff on it, your credit will gradually improve.

  • 8 months ago

    They're right. Utilization refers to the total amount you've borrowed and haven't yet paid back -- even if the first payment isn't due for several years.

    Your credit score will not go back to the way it was until you pay back ALL of it.

    Even if you give back the furniture, you probably still have to pay some money.

  • Anonymous
    8 months ago

    Long term this will not hurt you, it will help assuming you are never late. In the meantime, you have to deal with the 71 point hit. But that should not be a concern unless you are just itching to finance other stuff.

    If you really want to get rid of it, you can pay it off sooner.Paying that much for a dining set blows my mind. And financing it was not a good idea.

    But fast forward to however long the term was, it will help your credit more than 72 points that it hurt. Again, assuming you are never late and all other things are equal.

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  • 8 months ago

    Yes, that's how it works.  Remember that your credit score is a numerical representation of the risk you pose to someone who might loan you money at the exact moment your score is calculated.  The day before you bought the furniture, Wells Fargo was looking at a credit score that reflected one set of data and correlated to a certain level of risk.  

    The day after you bought that furniture, that set of data had changed.  You were now in more debt than you were the day before, thanks to an additional credit account that you added on top of all your previous credit obligations.  Since you have not yet demonstrated that you are capable of handling this increased load, you pose more risk to someone who might loan you money right now.  So, your score dropped.  

    Once you start to make payments, you will start to demonstrate that you've got things under control and the combination of less debt and a history of making payments on this new account will reduce the risk you pose and your score will start to recover.  

  • 8 months ago

    If you borrowed $2,100 than that is how much is reported to the credit bureaus. Are you saying Wells Fargo reported more than that? 

    Borrowing money will almost always cause your credit rating to go down because as your debt increases your ability to pay back new loans goes down.

    If you make your payments on time your credit rating will go back up as your debt goes down.

  • 8 months ago

    i would talk to wells fargo about it

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