HELOC counted as revolving credit!!!...ARGHHH

[Anonymous]

Talk about learning the hard way.    I never paid too much attention to my FICO scores, mostly because I never had a problem getting credit, that is, until this past year.  I know from my most recent re-fi in 2007, my score was considered very respectable at the time (around 750).  So when I was denied a loan for a used RV by my credit union, I decided to pull my credit scores.  And all three of them were in the 650 range, and one was at 624!!!  I could not understand for the life of me why my score had taken such a huge hit, until I saw that my $100K HELOC with First Horizon is being considered as revolving credit as if it were one of my credit cards!!!  To say that this vexes me is an understatement.  Sure, I KNOW it is in the technical sense "revolving credit," but it is secured (second lien).

I have read a number of posts that the "industry standard", for lack of a better term, for FICO re: any HELOC balances in excess of 50K SHOULD be considered an "installment" vice revolving credit.  FWIW, First Horizon was VERY unsimpathetic about my plight when I asked them how they report my HELOC to to three major credit bureaus.  They basically said, paid it off or find another lender who will.  Sure.  No problem.  I can pull 100K out of the sky like that...PFFTT.

Here is my question:  Is it even worth me filing a dispute with each credit reporting bureau to request them to count my HELOC as an installment???  I have read that the credit bureaus will just go back to the lender (in my case, First Horizon, who will tell them it is revolving credit even though for the purposes of FICO it should be considered a second trust).  This has DEVASTATED my credit rating, and by definition is not unsecured debt, although everyone is treating it as such.  I have read that filing disputes can cause you problems down the road, even if the dispute has validity.  Any suggestions would be GREATLY appreciated!!!!

[Anonymous]

I do not know much about HELOC's. The only thing I know is technically they are revolving credit so it isnt being reported inaccurately necessarily. Another thing about your post though is the secured part. Just because something is secured doesnt make it an installment account. If I get a $10K secured credit card it is still revolving. I think this is one that could go either way as some companies may report as revolving and some installment but that is one reason I have always been warned to stay away from HELOC's. They are very risky. Not much help to you I was just trying to show that just because its secure doesnt make it installment. Maybe someone with more advice can help the OP?

[haulingthescoreup]

A $100K CL HELOC should be reported as revolving credit, which includes credit cards, lines of credit, and home equity lines of credit. Revolving credit means that you can borrow, pay back, and borrow again. Installment credit means you borrowed, you pay it back, and you can't go back to the well.

With a CL of over $50K, it should be ignored for util purposes.

If your FICO score report gives a util figure, calculate your util with and without the HELOC and see which figure matches the one on the report. (If either, lol.)

[Anonymous]

A revolving credit account above $30K (TU) or $50K (EQ+EX) should be ignored by the Fico scoring model when calculating utilization. This doesn't apply exclusively to HELOCs - even if the First Horizon tradeline was a normal credit card account, it should also have been excluded from the calculation.

Have the credit reports been reviewed closely for other possible causes for the score drop, especially factors that may have changed since 2007? Such as late payment(s), collection(s), a very old account no longer reporting, etc. ...

[Anonymous]

Thanks for the prompt response, guys.  As you can tell,  I am a relative NOOB when it comes to this issue, so please bear with me.  What I do know is that the HELOC is both listed as revolving credit and DEFINITELY counts towards my utilization percentage/ratio on ALL THREE REPORTS (presently at 95% for the HELOC---which has resulted in an exhorbitantly high ultilization number around 50%).  I have a number of 0% items on the books, and will have more soon as I just wiped out a few credit cards.  But the HELOC is weighing me down like an anchor, and I don't think there is a damn thing I can do about it.

[Lel]

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@Anonymous wrote:

Thanks for the prompt response, guys.  As you can tell,  I am a relative NOOB when it comes to this issue, so please bear with me.  What I do know is that the HELOC is both listed as revolving credit and DEFINITELY counts towards my utilization percentage/ratio on ALL THREE REPORTS (presently at 95% for the HELOC---which has resulted in an exhorbitantly high ultilization number around 50%).  I have a number of 0% items on the books, and will have more soon as I just wiped out a few credit cards.  But the HELOC is weighing me down like an anchor, and I don't think there is a damn thing I can do about it.

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This is an important question: where did you get your credit reports and scores from?

[Anonymous]

It is a third-party company (the name escapes me right now) that participates with Bank of America's Privacy Assist Premier program.

[Lel]

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@Anonymous wrote:

It is a third-party company (the name escapes me right now) that participates with Bank of America's Privacy Assist Premier program.

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In that case, the scores you have are not FICO scores.  They are credit scores based on similar scoring criteria, but are distinct from actual FICO scores.  There is often zero correlation between your FICO scores and your non-FICO scores.

Other people have reported that their high-CL HELOCs are included in the calculation of utilization of revolving credit by the non-FICO score models.  Thus, these scores will be very low.  However, actual FICO scores exclude these HELOCs from utilization (see the approximate thresholds above), and these do not have an excessively negative effect on your scores.

As mentioned, it doesn't matter how the HELOC is classified on your credit reports - it only matters how they are scored.  My HELOC is reported as revolving on one credit report and as "overdraft/reserve checking" on the other.  But these descriptions don't hurt my score at all.

Consider obtaining your EQ and TU FICO scores from here.  I'm certain that you'll see that your HELOC is excluded from utilization, and that your credit score has been preserved.

[Anonymous]

Thanks.  Upon closer examination of my credit report, I noticed recent derog of no fault of my own.  Last August (2009), I signed up with Take Charge America to simplify paying my credit cards month-to-month.  I am pleased to say I recently paid the remaining balance off in full.  However, I just noticed that, while the TCA account was considered ACTIVE prior to the derog, 5 straight months of "30 day" late reports were generated from one participating creditor, and 2 straight months of "30 day" late payments from another participating creditor.  Now, I am furious.  I signed up with Take Charge to facilitate payments to my creditors and get a better handle on month-to-month payments to avoid missing or being late on payments.  But no less than 7 30-day late payments are now on my credit report while TCA was supposedly paying my creditors directly and ON TIME.  Suffice it to say, TCA will be getting a call from me first thing tomorrow.  This no doubt has had a negative impact on my credit scores, and TCA should work to get these blemishes expunged.

[MidnightVoice]

(Expletive deleted) Experian still calls my (over $50K) HELOC as "Credit Line Secured, Revolving"

So it STILL scres up my EX score (by 20 points according to Credit Secure) and still says "At least 1 or more of your accounts has a balance that is close to your credit limit, which may be lowering your score. When your balance is high, this can indicate to lenders that you are likely to overextend yourself."