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@hdporter wrote:
FWIW, a little internet scavenging surfaced an article that suggested that HELOC's tended to be scored as revolving lines when balances were under an amount ranging from 30K-50K, and as mortgages in excess of that. FICO is close lipped on specifics.
It can be inferred that FICO wants to attempt to distinguish between those who've merely shifted revolving debt to HELOC's from those have used HELOC's to finance home improvements (since the mere fact that one can tap a HELOC to shuffle revolving debt isn't a factor that significantly reduces default risk).
hauling, bear in mind FICO characterizes the HELOC debt based on the outstanding balance; not the line amount. So, $5K outstanding will likely be scored as revolving no matter how large the line. And, of course, it's uncertain whether $50K is actually a clear demarcation between revolving and installment treatment ... there could be a floating division point that depends upon one or more variables. I've seen no solid guidance.
@haulingthescoreup wrote:Thank you--that's an excellent and very enlightening post! So if the excerpt that I quoted is correct, I should have been greedy and gone for a $55 - $60K HELOC, instead of the $50K, since I really am using it for home improvement! sheesh I'm still untangling my own line of credit, but it appears that EQ is treating it as mortgage/ installment, EX is treating it as revolving, and TU is treating it both ways, according to the phase of the moon, I guess.
hdporter wrote: FWIW, a little internet scavenging surfaced an article that suggested that HELOC's tended to be scored as revolving lines when balances were under an amount ranging from 30K-50K, and as mortgages in excess of that. FICO is close lipped on specifics. It can be inferred that FICO wants to attempt to distinguish between those who've merely shifted revolving debt to HELOC's from those have used HELOC's to finance home improvements (since the mere fact that one can tap a HELOC to shuffle revolving debt isn't a factor that significantly reduces default risk).
@hdporter wrote:
hauling, bear in mind FICO characterizes the HELOC debt based on the outstanding balance; not the line amount. So, $5K outstanding will likely be scored as revolving no matter how large the line. And, of course, it's uncertain whether $50K is actually a clear demarcation between revolving and installment treatment ... there could be a floating division point that depends upon one or more variables. I've seen no solid guidance.
@haulingthescoreup wrote:
Does that mean that if I've barely tapped it, it will be regarded as revolving, whereas once we have packing crates on the porch and dumpsters in the yard and the whole line used, it might be treated as installment? I can see why they *might* do that, but it's a little scary to rely on.
If it's reported as an installment on your CRs, then no way a 70-90 point drop. If it's reporting as revolving with say util at 90%, then a 70-90 point drop is very realistic.
@hdporter wrote:
@haulingthescoreup wrote:
Does that mean that if I've barely tapped it, it will be regarded as revolving, whereas once we have packing crates on the porch and dumpsters in the yard and the whole line used, it might be treated as installment? I can see why they *might* do that, but it's a little scary to rely on.
In essence, that's right. But as I said, no one is making any firm statement as to the balance break point at which a HELOC shifts from being scored as revolving debt to being installment.
Of course, so long as your utilization is very low, it's not much of an issue. But in our case, it looks like whether our HELOC is scored as revolving or installment (and it looks like it sits on the border) makes a 70-90 point scoring difference.
@fused wrote:
If it's reported as an installment on your CRs, then no way a 70-90 point drop. If it's reporting as revolving with say util at 90%, then a 70-90 point drop is very realistic.
@haulingthescoreup wrote:
@fused wrote:
If it's reported as an installment on your CRs, then no way a 70-90 point drop. If it's reporting as revolving with say util at 90%, then a 70-90 point drop is very realistic.
MOAN!!! MOOOOOOANNNNN!!!!!
and those aren't moans of pleasure, either, go clean out your minds