LOC Crushes Credit Score... Other Options?

[Jordan Mummau]

BP Community,

Looking for some help on this topic. I'm currently winding down a flip that I have $100K+ into holding on a personal line. I just went under contract on a Duplex (Cash Buy) and scheduled to close by end of the year that will be a BRRRR and hold rental. The duplex, all in is going to require $135K in cash after purchase and reno. I have the funds to hold both. The issue I have is drawing on my personal LOC's for this extended period of time is pulling down my Credit Score. I've done similar transactions before using my LOC and the C.S jumps right back up after payoff but I'd like to look for other options to possibly finance the duplex through hard/private money. Any idea's or comments or creative thinking would be greatly appreciated! If there is anyone local to the Central PA area that wants to fund all or part of the debt on the duplex for 3.5 months + points and fair interest, let me know!

[Daniel Hennek]

FICO stands for Fair Isaac Corporation.  It's become a standard for referencing credit scores but it's a credit model.  TransUnion, Equifax and Experian are the 3 major credit bureaus. They provide information and a creditor or credit provider runs that information through their selected scoring model/s.

Now a days there are many scoring models used. Different banks or lenders will use different models.  Some of them weigh debt to limit ratios differently but 50 percent is a good rule of thumb.  The hit will typically be much bigger at 70 percent then again at 90.  Secured is also different than unsecured revolving.

30 percent debt to limit on a HELOC isn't going to make someone's score plummet. Many scoring models understand mortgage debt and don't usually treat it exactly like revolving. It will affect the score, but not a significant amount. However, some see twenty points as a "plummet" so it's subjective