We have a few HELOCs with 97% - 99% utilization rate with balances in the range of $70K - $200K. How do these affect mortgage FICO scores 2, 4, 5?
I keep reading completely conflicting advice where some sources say HELOC utilization rates don't affect credit scores at all, while others say they do affect scores significantly, and some others say that they don't unless you really max out the HELOC. Some say the impact is big, while some others say the impact is small.
Rental Property Investor · Youngstown, OH · Member since 2023 · 128 posts · 124 votes
3y
I have very little CC debt (0% interest), and most of my debt is in the form of two separate HELOCs totaling $50k which I've been using for rehabs and (stupidly) remodeling my own house. I'm not sure what the truth is re: HELOC utilization and whether or not it affects credit scores, but I do know that every month I make a $1,000 payment to pay down the outstanding HELOC debt, my FICO credit score bounces up a tick. And also, whenever I use the HELOC for a sizable amount at once (i.e. using $20k to purchase a property) my FICO credit score dropped like a stone... then slowly began to tick back up as I made those big payments. As for the other credit scores, not sure since I don't see those ones as regularly... FICO I see it monthly in my banking apps.
Perhaps it's not the HELOC utilization rate itself, but the utilization rate of your total credit overall (if you're near maxing out your HELOC, you're probably utilizing a high amount of your overall available credit). But, again, who the hell knows for sure.
I have very little CC debt (0% interest), and most of my debt is in the form of two separate HELOCs totaling $50k which I've been using for rehabs and (stupidly) remodeling my own house. I'm not sure what the truth is re: HELOC utilization and whether or not it affects credit scores, but I do know that every month I make a $1,000 payment to pay down the outstanding HELOC debt, my FICO credit score bounces up a tick. And also, whenever I use the HELOC for a sizable amount at once (i.e. using $20k to purchase a property) my FICO credit score dropped like a stone... then slowly began to tick back up as I made those big payments. As for the other credit scores, not sure since I don't see those ones as regularly... FICO I see it monthly in my banking apps.
Perhaps it's not the HELOC utilization rate itself, but the utilization rate of your total credit overall (if you're near maxing out your HELOC, you're probably utilizing a high amount of your overall available credit). But, again, who the hell knows for sure.
That's a helpful data point and it aligns with what I've seen with my credit as well!