@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.
@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".
@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.
@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.
@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?