How Should a First Mortgage HELOC Be Reported to Credit Agencies ?

[Anonymous]

Hi 

I have a HELOC as a first mortgage (30 years), original amount $290K.  I have always paid the HELOC as well as all my credit on time.  Never a missed payment/never late.  I am past the interest-only term of the HELOC and am now paying interest and principal.  My balance is currently $240K.  My HELOC statements show my monthly payment and the reduction in the balance owed however, the available credit is always $0.   

The total amount owed for that month and the credit balance after payment are equal.  For instance, the current statement will show $240K - $2K paid = $238K balance. The balance is now $238K  available balance = $0.  Next statement $238K - $2K paid= $236K balance and the credit balance will be $236K and so on.  The available amount of credit is always $0 so it looks like I have maxed out the HELOC every month.   

I saw a post that indicated a HELOC of $50K or less is reported as revolving credit.  How should a first mortgage HELOC be reflected on my credit report and how does it affect my credit? 

My current score is 690 and the HELOC is reported as revolving credit.    I have one credit card that is close to being maxed out and one that is at 50% but I dont think that would lower my score to 690.  I make >$150K salary.

I am trying to understand why the HELOC is reported as revolving credit.   If the HELOC was reported as a mortgage showing the original balance - new balance with available credit =$50K, would my credit score improve?  How should a first mortgage HELOC be reported to the credit agencies?  I plan to refinance but want to get the lowest rate I can.

Your expertise is desperately needed, and any advice or guidance greatly appreciated.

ccidespartan

[DaveInAZ]

First of all, when you say the original amount $290K but it reports as as "the available credit is always $0" it doesn't sould like it's a HELOC. When you say it is "past the interest-only term of the HELOC and you are now paying interest and principal", it is possible it converted to a traditional mortgage at that point? On your bank/mortgage statement does it also show $0 available? If so then I think it definitely converted to an installment mortgage loan.

I have a HELOC as a 2nd mortgage and it always reports with an available balance, the LOC limit minus current balance. My HELOC has a $29,500 limit, so it always reports as a revolving credit. How does yours report, as revolving or installment loan?

As far as your credit score that credit card that is close to being maxed out is most definitely hurting your score, if the other is over 50% that also is hurting your score. For Fico scoring:

0-9% CC/revolving utilization = Excellent
10-29% = Good
30-49% = Fair
50-74% = Poor
75%+ = Very Poor

That's overall, your combined credit balances divided by combined limits, but it also applies to each single card. I can tell from personal experience if I go over 50% on any one card it dings my credit score 15-20 points, even when my overall utilization is under 30%.

But yes, if the HELOC was reported as a mortgage showing the original balance - new balance with available credit =$50K, it would help your credit score improve. If you don't have any available credit on the HELOC it shouldn't be reporting as a revolving account.

Finally, what are you looking at for your credit report? Credit Karma lumps my HELOC in with CCs for both TU & EQ, but my service directly from EQ shows my HELOC under a separate line "Real Estate", with credit cards listing in another line "Revolving Credit.

[PersonalBanker89]

The lien position is irrelevant and reporting is based on original loan type. Sounds like the draw period on the line has ended and payments are now being amortized over remaining term of the note in order to have paid in full at maturity. This should be spelled out in your original loan docs.

Its hard to say if your score would improve with a mortgage vs HELOC product type and would need to know your full credit profile. How long was the interest only/draw period? How is your interest rate and what's the approximate LTV? Did you need cash out? I would be interested in putting yourself in a different product type.

Just my thoughts.