Difference in HELOC reporting catagory between TU & EQ ?

[Anonymous]

Just pulled fresh FICO scores from TU and EQ on myFICO as I am six weeksinto my CC paydown plan and most have reported reduced utilization by now.  TU has the higher score of the two but it is reporting my HELOC balance in the revolving credit total amount used while EQ reports it as part of the mortgage total balance.  Is this the way it is normally done between the two?  I am at 41% util on TU and 29% util on EQ because of this. I would have thought it should be in the mortgage balance since it is secured by the house?  Is it because it is a Line of Credit versus an installment payment? Anyone know if this is normally the way they do this?

[Anonymous]

What's the credit limit on the HELOC?

[RobertEG]

Technically, it is a revolving line of credit. But is a very secure LOC, and thus has somewhat special status in risk payment analysis, which is what FICO is.

An installmet loan is a loan with fixed agreement on balance of credit extended, with terms of repaymnent of that amount.

A revolving account is an account that extends you a line of credit (LOC), and then you therafter make your decision of how much of that credit limit you wish to use.

But HELOCS have special scoring provisions in FICO, probably based on the fact that any debt is secured by the property.

From my prior readings on this issue, FICO will apparently score most HELOCS as revolving credit unless the balance is above a certain amount, somewhere around $30,000.  Higher balance HELOCS are apparently scored as installment loans under FICO.

That is my understanding.

[Lel]

To clarify, it's the credit limit, not the balance, on the HELOC that determines whether it is scored as revolving or installment.  So in theory, a HELOC with a CL of $80,000 and a balance of $20,000 would still be excluded from the calculation of utilization of available revolving credit.

[RobertEG]

Yes, I misspoke, and agrree,  It is CL and not balance.

Thanks for the clarification!

[Anonymous]

 HELOC is for 22.5K.  So scorewise if it was a slightly larger CL it would help my score by going as installment and not counting the same as revolving CC utilization?  My original plan to increase my FICO scores was to payoff the CC and use the HELOC to smooth out financial bumps, but it would now seem that at this CL amount doing it wouldn't have the effect I was hoping for, putting aside the 20+% vs 7% interest issue.

[Lel]

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@Anonymous wrote:

 HELOC is for 22.5K.  So scorewise if it was a slightly larger CL it would help my score by going as installment and not counting the same as revolving CC utilization?  My original plan to increase my FICO scores was to payoff the CC and use the HELOC to smooth out financial bumps, but it would now seem that at this CL amount doing it wouldn't have the effect I was hoping for, putting aside the 20+% vs 7% interest issue.

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That's right, moving your unsecured debt (e.g. credit card debt) to your HELOC would not change your utilization, since a HELOC with a CL of that amount would be scored as revolving debt.

In general, many people would advise against transferring CC debt to a HELOC.  It's an attractive move, since the interest rates are lower, but if you hit another financial bump and are unable to make your HELOC payments, you could lose your house in foreclosure.