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Registered: ‎07-09-2013

Selling house and paying off mortgage/HELOC

I'm curoius as to how much impact it has when you sell a home and pay off your mortgage and HELOC.  This would mean I only show one credit card with a small balance and a small payment.  I would think removing $60K in debt from your report would help the score, wouldn't it?  Thanks.

Administrator Emeritus
Posts: 4,390
Registered: ‎03-01-2007

Re: Selling house and paying off mortgage/HELOC

Hi Duke2679,


Paying off your mortgage should reflect positively, though not necessarily from the elimination of your mortgage (installment) balance. And the positive impact may not be much, since you no longer have an open mortgage, which is a considered a plus



In a much more productive past life I served as FICO consumer affairs manager and myFICO Forums community manager from 2007 to 2012. Now semi-retired, I write the weekly Speaking of Credit column for
Moderator Emeritus
Posts: 32,880
Registered: ‎08-04-2007

Re: Selling house and paying off mortgage/HELOC

[ Edited ]

I'll add that you should consider the converse of the process. Paying off your mortgage doesn't help just like adding a $500k mortgage doesn't hurt. FICO largely ignores loan balances, or at least in relation to revolving accounts. If adding a large loan doesn't hurt (aside from the new TL reporting), then paying it off doesn't really help. Now a HELOC can be scored as a revolving, but FICO will lump it in as an installment up to a certain CL of that HELOC. That limit varies by FICO version and I think it is over $30k in general.

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