Does FICO classify HELOC independent of 3B category?

[Anonymous]

I just opened a 100k HELOC and noticed that with EQ it reports as a mortgage and with EX it reports as a revolving line.  It's not yet shown on TU, but soon, I imagine.  I was wondering if FICO will base its scoring by how each bureau categorizes it, or if it will categorize it the same for all three on its own (either as revolving or as installment), and if so, which?  

I suppose what I'm really trying to figure out is if I need to be concerned about keeping the under 10% util now w/re: to my EX report, or if I can feel confident so long as it's under 70-80%, since EQ calls it a mortgage, and I vaguely recall reading that there were thresholds determined by the original available amount, despite UTIL.  TIA.

[Revelate]

---

@Anonymous wrote:

I just opened a 100k HELOC and noticed that with EQ it reports as a mortgage and with EX it reports as a revolving line.  It's not yet shown on TU, but soon, I imagine.  I was wondering if FICO will base its scoring by how each bureau categorizes it, or if it will categorize it the same for all three on its own (either as revolving or as installment), and if so, which?  

I suppose what I'm really trying to figure out is if I need to be concerned about keeping the under 10% util now w/re: to my EX report, or if I can feel confident so long as it's under 70-80%, since EQ calls it a mortgage, and I vaguely recall reading that there were thresholds determined by the original available amount, despite UTIL.  TIA.

---

Where are you seeing the classification?

You have to check the base reports, I found inconsistency everywhere else with my own HELOC, and there score wise it wasn't counted as revolving under any score I consider relevant except EX FICO 2.  I couldn't really test installment with an existing mortgage, though over under 10% would do the trick if you can test that with FICO 8 monitoring.

[Thomas_Thumb]

Looking at US Fico Score Reason Codes dated 2013 on page 5 -  I see:

1) Proportion of revolving HELOC balances to total revolving balances is to high for Equifax Beacon and TransUnion FICO Risk Score Classic - code 64(M).

2) Ratio of revolving HELOC balances to total revolving balances is too high for Experian FICO Risk Score Classic - code 64(M)

*** (M) - denotes the code is only used in Fico Mortgage Score but is not currently used in the classic base model. ***

I can't tell what Fico versions are represented in the center section but, might be Fico 98/Fico 04 vintage.

http://www.fico.com/en/wp-content/secure_upload/FICO_Score_Reason_Codes_1424PS.pdf

[Anonymous]

I'm seeing the classifications on the reports pulled directly from the bureaus - eq for eq, ex for ex, and tu for tu (though it isn't yet showing up).

[Anonymous]

Thomas_Thumb - do you think that means, then, that they don't go by the category that the bureaus use on their reports?

[Thomas_Thumb]

---

@Anonymous wrote:

Thomas_Thumb - do you think that means, then, that they don't go by the category that the bureaus use on their reports?

---

Not sure I understand the question.

There has been an ongoing discussion for years regarding HELOCs being treated as revolving credit or an installment loan. One possibility often talked about is that above a certain LOC the HELOC is treated as an installment loan but under that LOC it is considered revolving. Another possibility is the creditor classifies the loan, the CRA shows the loan as classified and Fico treats it accordingly in scoring.

We do know each of the CRAs have flexibility in tweaking the base Fico scoring model. The ability to tweak was curtailed in Fico 9. For Fico 98/Fico 04 and even Fico 8, a 3rd possibility could be the HELOC is categorized differently based on the CRA.

[Anonymous]

Yes, thank you.  I think you pretty much summarized my thoughts on the possibilities ... I just wasn't sure if anyone had any additional info as to how it may be classified.  

Since I noticed that mine appears as revolving with one CRA (EX) and installment with the other (EQ - not yet reported with TU), I wanted to keep an eye on how it may impact my FICO 8 score.  I suppose since the balance of mine will fluctuate from month to month (sometimes a high UTIL, other times a low), I'll be able to see how it impacts my score and determine more easily based on those results.  

I see four options possible.  My guess is that if I enter into a UTIL between 50% and 70% and the impact is high for both CRAs, then it's because it's treated as revolving for both.  If the impact is only higher for the one reporting as revolving, but not for the one reporting for installment, then I'll figure that it's because FICO is basing it's algorithm on the classification that the CRA provides.  If neither is dramatically affected, then I'll assume that it's because regaredless of the CRA classification, FICO considers the HELOC an installment (since at 100k it'd be over the presumed threshold previously discussed).  Now, if the impact is higher for the one classified as mortgage than the one classified as revolving ... I won't have a clue what to think lol.  

This month my UTIL is reporting at 14%.  My record is not clean :-/  But I am working on fixing it.  I did notice a 7 point increase in my experian FICO 8 score after the HELOC reported, but I don't have the FICO results for EQ, yet.  I won't have access to that account until next month to start my observations.  I'll report back if I can figure anything out that may be of use. 

[Revelate]

---

@Thomas_Thumb wrote:

Looking at US Fico Score Reason Codes dated 2013 on page 5 -  I see:

1) Proportion of revolving HELOC balances to total revolving balances is to high for Equifax Beacon and TransUnion FICO Risk Score Classic - code 64(M).

2) Ratio of revolving HELOC balances to total revolving balances is too high for Experian FICO Risk Score Classic - code 64(M)

*** (M) - denotes the code is only used in Fico Mortgage Score but is not currently used in the classic base model. ***

I can't tell what Fico versions are represented in the center section but, might be Fico 98/Fico 04 vintage.

http://www.fico.com/en/wp-content/secure_upload/FICO_Score_Reason_Codes_1424PS.pdf

---

Actually that's an interesting find for another reason: I don't think there was a Mortgage Industry Option prior to FICO 8 which suggests those reason codes are more updated than I had previously thought.

Those aren't relevant for used algorithms though based on that description, I don't think one can even purchase the mortgage industry option from bureaus at this point?