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HELOC reports as installment not real estate

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Anonymous
Not applicable

HELOC reports as installment not real estate

 Heloc reports  on CR as installment or revolving debt instead of real estate/ mortgage debt. This seems to be hurting the score as mortgage loans are higher quality debt.  and this is a large chunk of debt. Is there anyway to change this? do lenders look at that and see it is real estate debt? able to score it differently?

 

also looked into refi last year feb march- worked with broker for months - then changed course and did not refi. this left 9 hard inq. on report some from same mortgage co same day, diff dept? how best to get these inq down to as few as poss? contactCRA's or co.s that made inq's?

Thanks

Message 1 of 7
6 REPLIES 6
Lel
Moderator Emeritus

Re: HELOC reports as installment not real estate

HELOCs are by definition lines of credit secured by real property, so any prospective lender will know that it is a real estate debt.  Technically, all HELOCs are revolving debt, and I think most people here have their HELOCs reporting as such.  In some cases, however, the lender might report it as installment debt.  But if your lender is reporting it as revolving, there's no way to compel them to change the reporting, since it is being correctly reported as revolving.

 

HELOCs are a bit funny in the way that they are treated in FICO scoring.  HELOCs with a limit (not balance) above a certain threshold will be scored as installment debt rather than revolving debt, regardless of how they are being reported.  The value of that threshold is not known for certain; it may be as low as ~$35,000 but the number that I've seen more commonly quoted is in the $40,000-$50,000 range.  In my case, I have a HELOC with a $98,000 CL.  On EQ it's reported as revolving and on TU it's reported as "overdraft/reserve checking".  I still have a high balance on it, but it is not being included in my utilization of revolving credit, and my scores don't suffer.

 

With regard to the inquiries, mortgage inquiries that are made within a 45 day window are treated as a single inquiry for scoring purposes.  So if those 9 inquiries all took place on the same day, it only counts as one inquiry.  Hard inquiries remain on your credit report for 2 years, but only affect your score for one year.  So by next month, the effect of the inquiries will no longer be present.  Disputing inquiries can cause problems that are difficult to undo, so you probably would be better off letting them age.

Message 2 of 7
Anonymous
Not applicable

Re: HELOC reports as installment not real estate

Lel, that was one of the best answers that I've ever seen to that question.  Very nice. 
Message 3 of 7
Anonymous
Not applicable

Re: HELOC reports as installment not real estate


@Anonymous wrote:
Lel, that was one of the best answers that I've ever seen to that question.  Very nice. 

Yes...I'll second that Lel knows allot about this stuff nice post very informative.

Message 4 of 7
Anonymous
Not applicable

Re: HELOC reports as installment not real estate

OK. The HELOC is being used in my credit utilization. But as lenders will see what is really there - I guess ok- but it is lowering my score-I think

 

The inq's- all 9 were not ALL on same day but several were. but all w/in 45 days. The report I got from exp stated tht 1 factor lowering my score was too many hard inq.

I will chk dates and see when they go past the 1 year mark and will no longer affect score?

but if i need to do something about these what could the problems that may bring? 9 hard inq is bothering me and lowering score.

your advice and knowledge are greatly appreciated!

Message Edited by moremoneyin10 on 02-08-2010 10:49 AM
Message 5 of 7
Anonymous
Not applicable

Re: HELOC reports as installment not real estate

You didn't post your scores...is this significant and/or impacting your loan options?

 

Message 6 of 7
Lel
Moderator Emeritus

Re: HELOC reports as installment not real estate


moremoneyin10 wrote:

OK. The HELOC is being used in my credit utilization. But as lenders will see what is really there - I guess ok- but it is lowering my score-I think

 

The inq's- all 9 were not ALL on same day but several were. but all w/in 45 days. The report I got from exp stated tht 1 factor lowering my score was too many hard inq.

I will chk dates and see when they go past the 1 year mark and will no longer affect score?

but if i need to do something about these what could the problems that may bring? 9 hard inq is bothering me and lowering score.

your advice and knowledge are greatly appreciated!

Message Edited by moremoneyin10 on 02-08-2010 10:49 AM

There's probably nothing that can be done about your HELOC being included in utilization.

 

I'm guessing that the reason code that you got from Experian (by the way, any Experian score that you get is not a FICO score) is just looking at the total number of inquiries, but doesn't take into account the fact that they are treated as a single inquiry.  I don't think it's anything to worry about.  The effect on inquiries also tends to lessen as they age, and at one year they cease to be a factor.

 

The inquiries that appear on your credit report are legitimate - they were made because of actions initiated by you (you sought to refinance your loan) - so you cannot legally dispute them as being incorrect.  If you do so, you could end up with fraud alerts on your credit reports, which could make application for future credit difficult.  Once the dispute process has been started, it may be hard to undo.  Again, this effort could be much ado about nothing, since the inquiries are nearly a year old.

Message 7 of 7
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