Once a variable-rate HELOC is approved, can a subsequent drop in credit score affect the HELOC variable interest rate?
No. HELOC interest rates are based on the prime rate +/- a fixed margin. For example, the interest rate might be prime + 1.49%. The only way the interest rate can go up is if the Federal Reserve raises the discount rate (which is rate upon which the prime rate is based). I've never heard of a HELOC that had a floating margin.
However, if you have a drop in credit score or new derogatory marks on your credit report, there is something that the bank might do. They could cut your HELOC limit down to the balance owed, or if there is no balance on the HELOC at all, then they could close it altogether.
thanks. I just wanted some confirmation on what I already knew. However, I did not think about the bank reducing the HELOC limits nor closing out the HELOC.