New 50k HELOC- score effect?

[Anonymous]

I have applied and been approved for a 50k HELOC from my local credit union ( we have about $200k equity in our home). I’ve read from this forum that at this limit, assuming full amount used, that it will be treated as an installment loan (mortgage) and not revolving credit. If this is the case, I assume scores wont dip drastically? If they do, they will recover with some months of responsible payment?

We are selling the home next spring so this amount will be paid off fairly quickly.

Thanks! I’m a worry wort after some unexpected results by FICO lately. I’m calling my credit union tomorrow to be sure they report it as an installment account, not revolving, for what it’s worth.

Sleepless In Portland

[Anonymous]

It seems to depend on where you look.  I also have a $50K HELOC.

Presently I can only access my reports via CreditKarma (TU & EQ) and my EX report on Experian's site, without paying.  On CK my HELOC is listed as a real estate loan, but on EX it shows up under revolving credit, and appears to count toward utilization, though maybe not for the actual FICO score (my score fluctuates depending on CC utilization, which the HELOC would buffer if it was considered part of this).  But in EX's summary, it's not listed under credit cards or under real estate, only under open accounts.  The My Debt Summary section shows my HELOC balance under "Credit and Retail Card Debt".

I'm also in the opposite situation of yours... I am refinancing to pay off my ex so I'm going to be losing my HELOC in a couple weeks, and going back to a conventional mortgage  We'll see what happens to my scores when that happens.  Sigh.

So EX seems to treat it as revolving credit, at least on the consumer website.  TU and EQ may see things differently.

I think I've read that credit lines of $50K and higher aren't counted toward utilization for scoring, so that could explain the anomalies on my EX score vs. utilization shown on the website.

[Anonymous]

Thanks for the details of your situation and how the three CRAs treat the line.

Did you see a decrease in your scores and if so approximately what was the hit?

[Anonymous]

I don't recall what my score hit was when opening the line back in 2017, though my scores were lower then than they are now.  I can only venture a guess as to what will happen after my refinance closes, the new mortgage reports and the HELOC is closed.  I'm sure I'll see a score drop for a while.  I'm debating whether to slip in a new credit card app between the time I close and the time the changes report.

New accounts, closed accounts tend to cause score drops for a period of time, but then letting things sit and age (gardening) lets them go back up over time.

[Anonymous]

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@Anonymous wrote:
Thanks for the details of your situation and how the three CRAs treat the line.

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I don't think the CRAs are treating the line differently, just that DaB is seeing different CMS software display it differently.

DaB, have you pulled a copy of your real credit report?  Remember what matters is what your real credit report(s) state, as those are what a potential lender pulling your report would see.  They of course don't see any fluff or online reports provided by places like Experian or Credit Karma, so if their software displays an account incorrectly in the grand scheme of things it isn't a big deal.

[Anonymous]

I ve learned to only rely on myfico- provided scores. True FICO scores are the ones banks pull, so the “fluff ones” are useless.

[Anonymous]

Even more important than the scores though are the reports.  Banks pull real credit reports, not reports from a CMS.