Re: Home Equity Line of Credit question..
07-23-2012 06:30 PM
If you take out a HELOC on your home and borrow the full amount of the HELOC, then it will report on your credit as a maxed out credit card. This can be problematic because it will make your scores drop. I would fully investigate the effects that the HELOC will have on your FICOs before you pull the trigger.
How it reports will depend upon the size of the HELOC. Large HELOCs report the same as installment loans. Smaller HELOCs report as revolving credit.
Our allowable HELOC amount is close to $160k and it reports as an installment loan.
Also, we didn't have to have an appraisal because we didn't want to borrow anywhere near the maximum value, and there is no mortgage. The bank used the county's value for tax assessment purposes to set the property value...so we didn't need an appraisal. If we had wanted to borrow more, then we likely would have had to have an appraisal.