Merchantville, NJ · Member since 2019 · 39 posts · 32 votes
I often see people post about using HELOC funds for additional capital towards REI, but have major concerns regarding credit impact.
Does a high balance on a HELOC negatively affect your credit score? The Transunion blog states that HELOCs are counted as revolving credit so a high balance could drop your score 100 pts. The Experian blog says exactly the opposite, that HELOC balances are not included as revolving debt in the FICO score calculation.
Several other sources all say it does count, including bank rate.
Curious on real world experience. I have an open HELOC but am afraid to touch it and negatively impact my score.
If I say for example have a $100k HELOC, is $25k about the max you can actually use to not see a score drop?
Investor · Omaha, NE · Member since 2021 · 244 posts · 163 votes
3y
@Kristin Feerst Since HELOC is counted as a second mortgage/secured debt from a credit standpoint, a high utilization won't have as much of negative impact as a high credit card balance
However, every credit bureau has a different way of calculating credit score so Experian may count a high HELOC balance differently than TransUnion or Equifax which explains why everyone has a different answer to this question