New HELOC and credit utilization

[WarthogWrangler]

I recently closed on a new HELOC through PENFED. The HELOC was for $107,000 and one of the first things I did with it was purchase Solar for my home.  $32,000 was the total so I wrote a check to them.  The HELOC just hit my credit and I was shocked to see my credit utilization is now sitting at almost 40% !!  I researched a HELOC a lot and one thing I never even thought of was how it affects your CU.   My score didn't drop at all, in fact it has gone up two points but it's concerning me that I now have a high CU reporting.  I was under the impressing this would work like a mortgage and not affect that.   I have some other things to do with the money but now I'm worried about using it.   I'm using Experian for credit monitoring.  

[ShanetheMortgageMan]

Which version of your score did you monitor?

Seems that the FICO 8's don't take a hit, but your FICO 2 may have per https://ficoforums.myfico.com/t5/Understanding-FICO-Scoring/HELOC-and-Affect-on-Scoring/td-p/6035987 which has some more info.  https://www.experian.com/blogs/ask-experian/how-does-a-heloc-affect-your-credit-score reiterates that FICO is designed to exclude HELOC's from revolving credit utilization calculations. 

[WarthogWrangler]

Yes my FICO 2 score tanked like 60 points which makes me mad but other scores seem ok. Kinda pointless to get a HELOC if you can't use it without destroying your score.  

[ShanetheMortgageMan]

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@WarthogWrangler wrote:

Yes my FICO 2 score tanked like 60 points which makes me mad but other scores seem ok. Kinda pointless to get a HELOC if you can't use it without destroying your score.  

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There are other benefits, but if you are going to get a HELOC and sit on it at high utilization it may have made more sense to go with a home equity loan.  A client of mine who has a large HELOC limit uses it to purchase a lot of inventory and has it almost completely paid off by the end of the month, then repeats the process... he times applying for credit when the balance reports on the lower end, so doesn't have much of a negative impact.

[cashorcharge]

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@ShanetheMortgageMan wrote:

Which version of your score did you monitor?

Seems that the FICO 8's don't take a hit, but your FICO 2 may have per https://ficoforums.myfico.com/t5/Understanding-FICO-Scoring/HELOC-and-Affect-on-Scoring/td-p/6035987 which has some more info.  https://www.experian.com/blogs/ask-experian/how-does-a-heloc-affect-your-credit-score reiterates that FICO is designed to exclude HELOC's from revolving credit utilization calculations. 

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Thanks for sharing this link.

I was under the thinking...as confirmed here that a HELOC will not figure into total CU when calculating F8 or F9.  For some of those CU's that use F2, that can be an issue.