Line of Credit

[corymcd88]

Are Lines of Credit scored the same way for new account and for ulit as with CC? PenFed told me no their are not scored the same way.

[ccb2115]

I'll find out soon. Just opened a PLOC with them several days ago.

[corymcd88]

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@ccb2115 wrote:
I'll find out soon. Just opened aPLOC with them several days ago.

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I did too, I guess we will see.

[jamie123]

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@corymcd88 wrote:

Are Lines of Credit scored the same way for new account and for ulit as with CC? PenFed told me no their are not scored the same way.

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Lines of Credit are scored as installment loans and NOT revolving credit like credit cards.

If this is the only open installment loan on your reports you can expect to see a small drop in your scores of 3 to 10 points when it first reports. You will gain the 3 to 10 points back in a couple of months and then your scores will rise VEEEERRRRY slowly month to month as long as the installment loan is open. Your scores rise because of the installment loan month to month is so slow that it will not be noticable to you until you close the account at which point your scores will drop 10 to 40 points.

[CreditDunce]

LOC's are revolving trade lines.  They are scored very similarly to a revolving credit card account.  In other words, they count as a new account and will normally count towards your revolving utilization.  On your credit report they should be reported as "Line Of Credit."

I can think of 3 different Penfed LOC products:

1) Thrifty LOC aka overdraft.  This is what I have.  I don't have checks for the LOC, but can transfer the money to my checking if desired. 

2) Personal LOC.  Comes with checks.  The APR may be lower than Thrifty, but I haven't looked at it.

3) Home Equity LOC.   Available for 10k-400k.   If the CL is above 35-50k, I don't believe the trade line will be counted in your revolving utilization.  The exact amount before not counting may vary with different FICO models.   Again, not something I have.  I can't speak from experience.

A Personal Loan or a Home Equity loan are installment loans. Installment trade lines are scored differently than revolving trade lines.

[Anonymous]

LOC's are revolving trade lines. So they are scored as such. There's conflicting info in this thread.

[gdale6]

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@Anonymous wrote:
LOC's are revolving trade lines. So they are scored as such. There's conflicting info in this thread.

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Correct, the only exception that I am aware of is a HELOC above I believe 35K will show as an installment loan.

[RobertEG]

+1

The very definition of a line of credit is the approval of a set, discretionary amount of credit that the consumer is authroized to use.

Payments then revolve around the amount of the approved limit that the consumer borrows.  LOCs are revolving credit.

Installment credit is the forwarding of a set amount to the consumer, with preset monthly payments, or installments.

However, as stated, FICO chooses to score secured LOCs, such as a HELOC, under installment credit when the amount is approx $35K or above.

That does not change the type of credit, only the manner in which it is scored by FICO.

[egaithe]

this is screwing me, I lost 16 points on EX.

[Thomas_Thumb]

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@RobertEG wrote:

+1

The very definition of a line of credit is the approval of a set, discretionary amount of credit that the consumer is authroized to use.

Payments then revolve around the amount of the approved limit that the consumer borrows.  LOCs are revolving credit.

Installment credit is the forwarding of a set amount to the consumer, with preset monthly payments, or installments.

However, as stated, FICO chooses to score secured LOCs, such as a HELOC, under installment credit when the amount is approx $35K or above.

That does not change the type of credit, only the manner in which it is scored by FICO.

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Is the threshold still $35k or has it been raised to $50k as some suggest. I have not come across any recent info. Also, at one time credit cards were not included if credit lines were above $35k. Is there a threshold for CCs these days regarding inclusion status?