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HELOC bringing me down - anything I can do?

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MBOhio2
Established Contributor

HELOC bringing me down - anything I can do?

Hi All - So I have very good credit in the sense that the age of my accounts is pretty long and my payment history is very good. However, I am really struggling with utilization % and it's killing my credit score. I want to refinance my mortgage and some student loans, so my low-ish score of around 680 is a problem.

 

Here's the deal - I have a couple of credit cards and they all have either low or $0 balance (will soon all be $0) but the limits on them are all pretty modest. I am just not a big CC user so my so lower limits are totally fine for me. When we bought our home 2 years ago, in order to avoid a jumbo loan (rates were high for jumbo at that time), we did traditional mortgage up to the jumbo limit and then did a HELOC to cover the rest (we put down a very large down payment). So now we have a HELOC that is close to maxed out because it was only taken out to actually purchase our home. We pay on it monthly, but paying it down will take time. On all of my credit reports, the HELOC is seen as revolving credit and gets lumped together with the credit cards. Therefore, despite having low or $0 balances on my credit cards, my revolving utilization is still around 85%. I get that this is technically accurate, but it's making my credit score lower at 680. When I play with score simulators, I would be high 700s if my utilization was anything under 30%. We will get there, but it will take some time to pay down the HELOC. 

 

So I'm in this sort of catch 22 where my credit score is low because of the HELOC, but I really need it to be higher to refinance. Any creative solutions here or do we just have to deal with lower scores until the HELOC is paid down? Thanks in advance!

Mid-2010 Starting Scores: FAKO EQ 476 FAKO EX 506 FICO TU98 575
July 2017 Current Scores: Approx 710 (waiting for official updates)
9 REPLIES 9
AllZero
Mega Contributor

Re: HELOC bringing me down - anything I can do?

Not knowing your exact details, below are benchmarks for FICO 8. Mortgage FICO scores should react similar.

Remember these utilization thresholds: 8.9%, 28.9%, 48.9%, 68.9%, 88.9%

10-15 points for aggregate crossing a threshold.
+- 5 points points for individual crossing a threshold.

Look into AZEO All Zero Except One card reporting a small balance eg 8.9% or lower.

Mortgage FICO score like more revolving accounts reporting zero.
Message 2 of 10
MBOhio2
Established Contributor

Re: HELOC bringing me down - anything I can do?

Thanks AllZero - this is helpful and I might be able to play with this a little to get a bump. I would really love to get my score above 720 for refinancing, but I am not sure that will be possible with the darn HELOC where it is currently at. 

Mid-2010 Starting Scores: FAKO EQ 476 FAKO EX 506 FICO TU98 575
July 2017 Current Scores: Approx 710 (waiting for official updates)
Message 3 of 10
AllZero
Mega Contributor

Re: HELOC bringing me down - anything I can do?

You're welcome.

Are you eligible for credit limit increases on any of your cards? Preferably soft pull inquiry that should add in utility padding.
Message 4 of 10
Anonymous
Not applicable

Re: HELOC bringing me down - anything I can do?


@MBOhio2 wrote:

I have a couple of credit cards and they all have either low or $0 balance (will soon all be $0) but the limits on them are all pretty modest.


This may not help move the needle much, but if it were me, I'd probably try for a few credit limit increases on your cards to pad the utilization.   Just because you have a large CL doesn't mean you have to use all of it.  Just keep doing your usual modest spend on it, but it might look better to a computer algorithm. 

 

And, don't put all your cards at 0% - let a small balance report on at least one card.  (Note:  I have no idea how a HELOC would factor in to the AZEO treatment and a refi...someone with more experience will have to chime in.)

 

Best of luck!  

 

<edited to add:  AllZero, we're thinking alike on that one!>

Message 5 of 10
AllZero
Mega Contributor

Re: HELOC bringing me down - anything I can do?

Alternatively, get a credit card that is known to give high credit limit or CLI e.g. Lowes card to add to utility padding. However, best to check with your lender before incurring more credit and hard pull inquiry.

You'll get penalty points: new account, inquiry, possibly reset your AoYA Age of Youngest Account if greater than 12 months, and lower your AAoA Average Age of Accounts.
Message 6 of 10
AllZero
Mega Contributor

Re: HELOC bringing me down - anything I can do?


@Anonymous wrote:

@MBOhio2 wrote:

I have a couple of credit cards and they all have either low or $0 balance (will soon all be $0) but the limits on them are all pretty modest.


This may not help move the needle much, but if it were me, I'd probably try for a few credit limit increases on your cards to pad the utilization.   Just because you have a large CL doesn't mean you have to use all of it.  Just keep doing your usual modest spend on it, but it might look better to a computer algorithm. 

 

And, don't put all your cards at 0% - let a small balance report on at least one card.  (Note:  I have no idea how a HELOC would factor in to the AZEO treatment and a refi...someone with more experience will have to chime in.)

 

Best of luck!  

 

<edited to add:  AllZero, we're thinking alike on that one!>


Great minds think alike. Smiley Happy

Message 7 of 10
MBOhio2
Established Contributor

Re: HELOC bringing me down - anything I can do?


@AllZero wrote:
Alternatively, get a credit card that is known to give high credit limit or CLI e.g. Lowes card to add to utility padding. However, best to check with your lender before incurring more credit and hard pull inquiry.


AllZero - This is something to think about and I will defintiely discuss with my lender before doing anything. Regarding Lowes, what do their CLs typically look like? Before I even consider, I am curious what kind of help it might give me. Thanks!

Mid-2010 Starting Scores: FAKO EQ 476 FAKO EX 506 FICO TU98 575
July 2017 Current Scores: Approx 710 (waiting for official updates)
Message 8 of 10
AllZero
Mega Contributor

Re: HELOC bringing me down - anything I can do?

Transunion puller, Synchrony backed. I think it goes up to $25k. Some call credit solutions # and ask for CLI if SL too low. * Subject to your credit profile. Best to look around the approvals forum for data points.
Message 9 of 10
Anonymous
Not applicable

Re: HELOC bringing me down - anything I can do?

Depending on profile, you can get up to $35k, but the online request tops out at $25k - higher than that requires calling Credit Solutions. They may start you low but you can call in and ask for more. Shoot for the moon and they’ll counteroffer.
Message 10 of 10
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