topic Re: High Utilization - HELOC counting as revolving credit instead of installment in General Credit Topics

High Utilization - HELOC counting as revolving credit instead of installment

Anonymous — Fri, 23 Apr 2021 17:34:44 GMT

Hello all,

My HELOC is in the repayment period and since I can't borrow against it anymore, this should be reported as an installment loan.

All my CC's are paid off but my reports show 63% utilization. I contacted the bank to have them report it as such, the rep told me she agreed with me but then I received a letter from the bank saying it's reporting correctly.

Do I need to keep disputing with the bank so it reports to the CRA's or am I screwed with this erroneous item?

Re: High Utilization - HELOC counting as revolving credit instead of installment

SouthJamaica — Fri, 23 Apr 2021 17:52:40 GMT

@Anonymous wrote:
Hello all,

My HELOC is in the repayment period and since I can't borrow against it anymore, this should be reported as an installment loan.

All my CC's are paid off but my reports show 63% utilization. I contacted the bank to have them report it as such, the rep told me she agreed with me but then I received a letter from the bank saying it's reporting correctly.

Do I need to keep disputing with the bank so it reports to the CRA's or am I screwed with this erroneous item?

This is very interesting to me, as I have a personal line of credit which is nearing its "repayment period", and I was wondering how this is going to affect the way the account reports. Since its inception it has been reporting as a revolving account, but as you point out it will no longer actually be revolving once its status changes.

So I hope someone with knowledge of this issue will weigh in. I'm thinking @Revelate might have something on this.

Re: High Utilization - HELOC counting as revolving credit instead of installment

CH-7-Mission-Accomplished — Fri, 23 Apr 2021 18:29:53 GMT

@Anonymous wrote:
Hello all,

My HELOC is in the repayment period and since I can't borrow against it anymore, this should be reported as an installment loan.

All my CC's are paid off but my reports show 63% utilization. I contacted the bank to have them report it as such, the rep told me she agreed with me but then I received a letter from the bank saying it's reporting correctly.

Do I need to keep disputing with the bank so it reports to the CRA's or am I screwed with this erroneous item?

Are you allowed to borrow against the HELOC by the amount paid off on the loan? That's normally the case and that is a revolving loan. Ther "LOC" in HELOC is usually the tip off that it's a revolver. Perhaps your loan turns into a fixed rate loan for the full repayment period and you aren't allowed to borrow against it any longer?

Re: High Utilization - HELOC counting as revolving credit instead of installment

SouthJamaica — Fri, 23 Apr 2021 18:36:56 GMT

@CH-7-Mission-Accomplished wrote:
@Anonymous wrote:
Hello all,

My HELOC is in the repayment period and since I can't borrow against it anymore, this should be reported as an installment loan.

All my CC's are paid off but my reports show 63% utilization. I contacted the bank to have them report it as such, the rep told me she agreed with me but then I received a letter from the bank saying it's reporting correctly.

Do I need to keep disputing with the bank so it reports to the CRA's or am I screwed with this erroneous item?
Are you allowed to borrow against the HELOC by the amount paid off on the loan? That's normally the case and that is a revolving loan. Ther "LOC" in HELOC is usually the tip off that it's a revolver. Perhaps your loan turns into a fixed rate loan for the full repayment period and you aren't allowed to borrow against it any longer?

During the repayment period, the borrower can no longer borrow, but must simply pay the loan down; so it's no longer "revolving".

Re: High Utilization - HELOC counting as revolving credit instead of installment

CH-7-Mission-Accomplished — Fri, 23 Apr 2021 18:54:18 GMT

@SouthJamaica wrote:
@CH-7-Mission-Accomplished wrote:
@Anonymous wrote:
Hello all,

My HELOC is in the repayment period and since I can't borrow against it anymore, this should be reported as an installment loan.

All my CC's are paid off but my reports show 63% utilization. I contacted the bank to have them report it as such, the rep told me she agreed with me but then I received a letter from the bank saying it's reporting correctly.

Do I need to keep disputing with the bank so it reports to the CRA's or am I screwed with this erroneous item?
Are you allowed to borrow against the HELOC by the amount paid off on the loan? That's normally the case and that is a revolving loan. Ther "LOC" in HELOC is usually the tip off that it's a revolver. Perhaps your loan turns into a fixed rate loan for the full repayment period and you aren't allowed to borrow against it any longer?
During the repayment period, the borrower can no longer borrow, but must simply pay the loan down; so it's no longer "revolving".

Gotcha. Thanks. My prior HELOC's were always reusable and reported as revolving. Because the limit was high compared to a credit card -- like 100K -- FICO did not count the balance in the utilization calculation.

Re: High Utilization - HELOC counting as revolving credit instead of installment

CH-7-Mission-Accomplished — Fri, 23 Apr 2021 18:59:02 GMT

Here is what Experian says. They do indicate it's a revolver ...

https://www.experian.com/blogs/ask-experian/what-is-a-home-equity-line-of-credit-heloc/

Re: High Utilization - HELOC counting as revolving credit instead of installment

SouthJamaica — Fri, 23 Apr 2021 19:05:12 GMT

@CH-7-Mission-Accomplished wrote:
Here is what Experian says. They do indicate it's a revolver ...

https://www.experian.com/blogs/ask-experian/what-is-a-home-equity-line-of-credit-heloc/

Yes but it doesn't say how it gets reported once it's in the repayment period.

Re: High Utilization - HELOC counting as revolving credit instead of installment

Revelate — Fri, 23 Apr 2021 19:54:54 GMT

@SouthJamaica wrote:
@Anonymous wrote:
Hello all,

My HELOC is in the repayment period and since I can't borrow against it anymore, this should be reported as an installment loan.

All my CC's are paid off but my reports show 63% utilization. I contacted the bank to have them report it as such, the rep told me she agreed with me but then I received a letter from the bank saying it's reporting correctly.

Do I need to keep disputing with the bank so it reports to the CRA's or am I screwed with this erroneous item?
This is very interesting to me, as I have a personal line of credit which is nearing its "repayment period", and I was wondering how this is going to affect the way the account reports. Since its inception it has been reporting as a revolving account, but as you point out it will no longer actually be revolving once its status changes.

So I hope someone with knowledge of this issue will weigh in. I'm thinking @Revelate might have something on this.

To my knowledge the actual type and terms of the HELOC do not change regardless of what state it is in. A HELOC is a revolving tradeline.

That said, under modern algorithms they are excluded from the revolving utilization metrics for exactly this reason, and even under the older ones if you have a sufficiently sized HELOC it is also discounted as any revolver with a large limit would be.

As for what the CMS interpreting that as 63% utilization, don't sweat it. That has zero bearing on the FICO algorithms.

ETA: Actually if HELOCs converted from revolving to installment once into the repayment cycle, there would've really been no need to exclude them from revolving utilization metrics. As a result, I would suggest it is nearly 100% reporting correctly even if there's not really much literature around that available.

Re: High Utilization - HELOC counting as revolving credit instead of installment

Anonymous — Fri, 23 Apr 2021 21:15:54 GMT

Yes they are excluded from 5/4/2 at the appropriate cutoff's and in versions 8/9, there are actually special metrics to measure HELOCs and they're measured in a variety of ways, such as HELOC Balance as the numerator and total revolving balance as the denominator. Basically seeing what portion of your revolving balances are the HELOC balance. Measured a couple other ways as well, check out the negative Score Factors.

they are not just dumped in revolving Balances by the algo, it uses special metrics for them now. As Rev said, ignore the CMS calculation.

Re: High Utilization - HELOC counting as revolving credit instead of installment

SouthJamaica — Sat, 24 Apr 2021 02:30:54 GMT

@Anonymous wrote:
Yes they are excluded from 5/4/2 at the appropriate cutoff's and in versions 8/9, there are actually special metrics to measure HELOCs and they're measured in a variety of ways, such as HELOC Balance as the numerator and total revolving balance as the denominator. Basically seeing what portion of your revolving balances are the HELOC balance. Measured a couple other ways as well, check out the negative Score Factors.

they are not just dumped in revolving Balances by the algo, it uses special metrics for them now. As Rev said, ignore the CMS calculation.

So @Revelate and @Anonymous would your answers be the same for a PLOC as opposed to a HELOC?

Re: High Utilization - HELOC counting as revolving credit instead of installment

Anonymous — Sat, 24 Apr 2021 02:52:56 GMT

@SouthJamaica wrote:
@Anonymous wrote:
Yes they are excluded from 5/4/2 at the appropriate cutoff's and in versions 8/9, there are actually special metrics to measure HELOCs and they're measured in a variety of ways, such as HELOC Balance as the numerator and total revolving balance as the denominator. Basically seeing what portion of your revolving balances are the HELOC balance. Measured a couple other ways as well, check out the negative Score Factors.

they are not just dumped in revolving Balances by the algo, it uses special metrics for them now. As Rev said, ignore the CMS calculation.
So @Revelate and @Anonymous would your answers be the same for a PLOC as opposed to a HELOC?

@SouthJamaica An LOC would just be treated as a regular Revolver, like HELOCS were in 5/4/2. Subject to the cutoff's of course.

On 8/9, Only the HELOCs get the special metrics and treatment far as I can ascertain.

Re: High Utilization - HELOC counting as revolving credit instead of installment

SouthJamaica — Sat, 24 Apr 2021 03:00:31 GMT

@Anonymous wrote:
@SouthJamaica wrote:
@Anonymous wrote:
Yes they are excluded from 5/4/2 at the appropriate cutoff's and in versions 8/9, there are actually special metrics to measure HELOCs and they're measured in a variety of ways, such as HELOC Balance as the numerator and total revolving balance as the denominator. Basically seeing what portion of your revolving balances are the HELOC balance. Measured a couple other ways as well, check out the negative Score Factors.

they are not just dumped in revolving Balances by the algo, it uses special metrics for them now. As Rev said, ignore the CMS calculation.
So @Revelate and @Anonymous would your answers be the same for a PLOC as opposed to a HELOC?
@SouthJamaica An LOC would just be treated as a regular Revolver, like HELOCS were in 5/4/2. Subject to the cutoff's of course.

On 8/9, Only the HELOCs get the special metrics and treatment far as I can ascertain.

So it's your view that it will continue to be reported and factored in as it has been, even after it moves into "repayment period" and the limit has become unavailable?

Re: High Utilization - HELOC counting as revolving credit instead of installment

Revelate — Sat, 24 Apr 2021 04:04:31 GMT

@SouthJamaica wrote:
@Anonymous wrote:
@SouthJamaica wrote:
@Anonymous wrote:
Yes they are excluded from 5/4/2 at the appropriate cutoff's and in versions 8/9, there are actually special metrics to measure HELOCs and they're measured in a variety of ways, such as HELOC Balance as the numerator and total revolving balance as the denominator. Basically seeing what portion of your revolving balances are the HELOC balance. Measured a couple other ways as well, check out the negative Score Factors.

they are not just dumped in revolving Balances by the algo, it uses special metrics for them now. As Rev said, ignore the CMS calculation.
So @Revelate and @Anonymous would your answers be the same for a PLOC as opposed to a HELOC?
@SouthJamaica An LOC would just be treated as a regular Revolver, like HELOCS were in 5/4/2. Subject to the cutoff's of course.

On 8/9, Only the HELOCs get the special metrics and treatment far as I can ascertain.
So it's your view that it will continue to be reported and factored in as it has been, even after it moves into "repayment period" and the limit has become unavailable?

https://ficoforums.myfico.com/t5/Understanding-FICO-Scoring/All-revolvers-zero-testing-HELOC-Amex-charge-PLOC/td-p/4913590

I believe the FICO 04 models used for mortgage underwriting may have been actually changed, which to my knowledge would be only one of 2 times that FICO went back to tweak an existing algorithm (the other being the FICO 8 initial release AU fiasco). You may still be able to find some FICO employee statements near the dawn of this forum that confirm that.

EX FICO 2 is the only relevant score that I believe it counts for, and even then my own HELOC from DCU is one of those squirrley CU tradelines on that algorithm so I'm only 99% on that one.

Re: High Utilization - HELOC counting as revolving credit instead of installment

Anonymous — Sat, 24 Apr 2021 05:11:19 GMT

@SouthJamaica wrote:
@Anonymous wrote:
@SouthJamaica wrote:
@Anonymous wrote:
Yes they are excluded from 5/4/2 at the appropriate cutoff's and in versions 8/9, there are actually special metrics to measure HELOCs and they're measured in a variety of ways, such as HELOC Balance as the numerator and total revolving balance as the denominator. Basically seeing what portion of your revolving balances are the HELOC balance. Measured a couple other ways as well, check out the negative Score Factors.

they are not just dumped in revolving Balances by the algo, it uses special metrics for them now. As Rev said, ignore the CMS calculation.
So @Revelate and @Anonymous would your answers be the same for a PLOC as opposed to a HELOC?
@SouthJamaica An LOC would just be treated as a regular Revolver, like HELOCS were in 5/4/2. Subject to the cutoff's of course.

On 8/9, Only the HELOCs get the special metrics and treatment far as I can ascertain.
So it's your view that it will continue to be reported and factored in as it has been, even after it moves into "repayment period" and the limit has become unavailable?

@SouthJamaica Yes.

Re: High Utilization - HELOC counting as revolving credit instead of installment

Anonymous — Sat, 24 Apr 2021 06:34:12 GMT

@SouthJamaica after reading @Revelate's thread, I correct my statement. I understand what he was saying now about them potentially changing it after release because HELOCS don't appear to be factored in 5/4 as Revolvers, contrary to my earlier statement. Like Rev said, apparently only version 2 and then all the special metrics on 8/9.

but nevertheless there won't be any change in the reporting due to it going to the repayment period.