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HELOC - increase or decrease score?

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Anonymous
Not applicable

HELOC - increase or decrease score?

I'm working on getting a $100k HELOC.  My current revolving CL is around $3k and I have no mortgage installment loan, only an auto loan (about 15 mo old and with about $25k left to pay on it).  I've read that a HELOC may be reported as mortgage installment OR factored into revolving, however, it's typically based on whether it's over or under $50k.  I also came across this thread, specifically concerning a 100k HELOC, but it's fairly old now, and I know there have been at least two FICO updates since it posted, so I'm looking for some updated answers.

 

Do you think a 0 balance 100k HELOC will impact my overall revolving credit, thereby improving my score?  If I use it, do you think I should stick within the 10% suggestions and zero out all other accounts to optimize my scores?

 

I want to refinance that auto loan, so do you think I should do it after the loan closes and before it hits my credit, or after it shows, since at that time it will be a 0 balance HELOC?

 

Thanks for your thoughts on this.

Message 1 of 8
7 REPLIES 7
Revelate
Moderator Emeritus

Re: HELOC - increase or decrease score?

That 100K thread is a red herring, if there is a line it's a lot less than that:

 

http://ficoforums.myfico.com/t5/Understanding-FICO-Scoring/All-revolvers-zero-testing-HELOC-Amex-cha...

 

Was my own attempt at trying to diagnose the HELOC among other things on various bureaus, so to answer: other than EX FICO 2 I don't think the HELOC will help your revolving utilization at all on any relevant score.

 

I'm not certain on the installment utilization side though, hard to say without going over a breakpoint and I'm not in a position where I can test that given my mortgage still kills that for me, but I can state with some certainty that my 27K HELOC isn't counting on the majority of currently used FICO scores as revolving.




        
Message 2 of 8
Anonymous
Not applicable

Re: HELOC - increase or decrease score?

Thanks for posting your link.  It was definitely insightful!  

Message 3 of 8
RobertEG
Legendary Contributor

Re: HELOC - increase or decrease score?

As far as I am aware, HELOCs above a certain level, which I believe is approx $35K, are not included by FICO in your % util, even though they are a revolving line of credit.

I am not aware of any public statement by FICO of a change in their scoring.......

Message 4 of 8
Revelate
Moderator Emeritus

Re: HELOC - increase or decrease score?


@RobertEG wrote:

As far as I am aware, HELOCs above a certain level, which I believe is approx $35K, are not included by FICO in your % util, even though they are a revolving line of credit.

I am not aware of any public statement by FICO of a change in their scoring.......


Actually it was stated here by an internal FICO employee who still blogs about credit stuff, which is different than full monty press release to be sure.  My own testing with my $27K tradeline shows it did get backed into 2/3 of the mortgage models, and exists absolutely in FICO 8/9.

 

The 35K line was just a SWAG at some point, to my knowledge my 27K is the lowest that's been tested at least here on these forums at any rate, and my test data around this is pretty good actually.




        
Message 5 of 8
Anonymous
Not applicable

Re: HELOC - increase or decrease score?

@Revelate - so, to confirm ... are you saying that with as low as 27k it's reporting as mortgage for two of the three CRAs, and so it's not impacting total util?  Very long day.  I'm clearly having trouble processing :-/

Message 6 of 8
Revelate
Moderator Emeritus

Re: HELOC - increase or decrease score?


@Anonymous wrote:

@Revelate - so, to confirm ... are you saying that with as low as 27k it's reporting as mortgage for two of the three CRAs, and so it's not impacting total util?  Very long day.  I'm clearly having trouble processing :-/


It's not counting as revolving, which is the important thing.

 

Jury is out as to whether it's calculated as an installment line (vis a vis mortgage) or simply discounted from all utilization calculations; as for reporting -

 

EX: Home Equity

TU: HOME EQUITY LOAN

EQ: Home Equity Line of Credit (according to CK which may be parsing it somehow)




        
Message 7 of 8
Anonymous
Not applicable

Re: HELOC - increase or decrease score?

I just wanted to update that my 100k heloc reported this month for the first time with a $14k balance to EQ as a mortgage.  They used $100 as the minimum payment, even though the monthly is revolving.  I don't yet know the result of my score ... I should know in a few days and can update.

With EX, they counted the whole 100k as part of my availble revolving credit and the $14k factors as part of that UTIL, since the TL is listed in the revolving category. The result was an increase in my F8 score.

TU hasn't reported anything, yet.  I'll update if/when it does.

Message 8 of 8
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