HELOC - Will it affect my FICO?

[Anonymous]

Just looking at only my Credit Cards (Ignoring department store cards and auto leases, mortgate

My current utilization rate: <1.63%

My Current Total Credit Limit: $52,500 

My AAoA: 6 years

My Fico Score: 823

I just opened a HELOC account, I actually got funded yesterday. It is a 2nd lien on my one and only property which also has a 1st lien; my mortgage. It has a draw period of 10 years followed by a 20 year repayment period.

My new debt (payment due every month) will be $450 per month (constant, every month as I'm taking the full HELOC amount): This is interest only.

How will it affect my credit? Will it contribute to my Mix? Does it affect the AAoA ? I know that it might hurt it a bit, but in a couple months it should be back up again.

Any thoughts?

[DallasLoanGuy]

should see a spike in utilization as it is a revolving account

[Revelate]

Depends on the size of the HELOC: somewhere around 2008 IIRC FICO started excluding HELOCs of a certain size from the revolving utilization calculation.  I don't think it was ever stated precisely what the cutoff was but 35K has been floating around for a while from the old data trackers on the forum.

Also 35K was a theoried credit card CL cutoff line too for discounting from revolving utilization metrics.

If it is counted, it is as revolving, and you can expect a non-trivial penalty as your scores are uber gold-plated; also count the department store cards in your aggregate CL too, they're also revolving.

The HELOC regardless of size will count for AAOA purposes, but if it's discounted from the utilization calculation, it may still be calculated on the number of revolving tradelines with balances.  Not sure as it's something I can't test myself currently, though if in 7 months I take the 50K HELOC to help smooth out college education expenses, then I'll get to see first hand by playing with it hehe.

Anyway curious as to what the size of your HELOC exactly is rather than my napkin mathing the payment on 4.5%, and also am curious as to what the impact on your scores are if you're tracking any.

[Anonymous]

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@Revelate wrote:

Depends on the size of the HELOC: somewhere around 2008 IIRC FICO started excluding HELOCs of a certain size from the revolving utilization calculation.  I don't think it was ever stated precisely what the cutoff was but 35K has been floating around for a while from the old data trackers on the forum.

Also 35K was a theoried credit card CL cutoff line too for discounting from revolving utilization metrics.

If it is counted, it is as revolving, and you can expect a non-trivial penalty as your scores are uber gold-plated; also count the department store cards in your aggregate CL too, they're also revolving.

The HELOC regardless of size will count for AAOA purposes, but if it's discounted from the utilization calculation, it may still be calculated on the number of revolving tradelines with balances.  Not sure as it's something I can't test myself currently, though if in 7 months I take the 50K HELOC to help smooth out college education expenses, then I'll get to see first hand by playing with it hehe.

Anyway curious as to what the size of your HELOC exactly is rather than my napkin mathing the payment on 4.5%, and also am curious as to what the impact on your scores are if you're tracking any.

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Thank you for your prompt response-

My HELOC is for $125k, as of today my balance is $125k (I took the whole amount right away, so in theory i'm utilizing 100% of my available credit)

To your point, if this was calculated as regular TL,  I would be screwed. But, I don't think it is treated as revolving. 

As of Feb 13th (before HELOC) (before Citi CC ($9k CL being closed due to inactivity on 3/6):
Fico 8 (Experian) 813

As of Feb 27th (after HELOC hard inquiry) (before Citi CC ($9k CL being closed due to inactivity on 3/6):

Fico 8 (Transunion) 821

I will keep updating this thread to see how the HELOC will impact my score. I'm sure it will go down temporarily.

Also, I requested my citi card to be re-opened today. So it is under review. This "inquiry" might impact my score next month.

I'm 27.

[Anonymous]

Citi card got re-opened a few days ago. FICO score as of March 12th: 819. This should include HELOC. Kinda weird it has not gone down at all!

[Revelate]

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@Anonymous wrote:

Citi card got re-opened a few days ago. FICO score as of March 12th: 819. This should include HELOC. Kinda weird it has not gone down at all!

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Not really, sounds like the HELOC is being excluded correctly which is a good thing in your case .

If you look at the tradeline data though it should be listed as revolving.  Check any of the bureau's datasets.

Reopening a card while helpful may not make a material difference on many if not all calculations.  Inquiry damage can be 0 if you don't fall into a different bin on that part of the scorecard.