Credit Scores regarding Credit Cards vs HELOC

[David Roberts]

I have never been a person to use credit much.  Always viewed debt as bad, until I realized how it can be used in a good way especially when someone else isn't paying for it.

So this was my first full year involved in buying real estate. I bought one house in all cash with my own money, rehabbed it with a 0% credit card and got the house rented. Not a week later another deal came along and I purchased it with a HELOC from my primary residence and opened a 2nd 0% credit card, knowing I'd need the extra money since I was still carrying a large balance on the other card. I was surprised to find my credit score plummet substantially, as I have never missed payments in my life. Rude awakening I suppose.

HELOC limit = 75k. Balance 57.6k

0% card 1 limit = 16k.  Balance 14k (I get cash back and so I pay the contractor like this, then keep the card from going over limit for now until this last rental I bought is done and rented).  Promotion ends July 2016

0% card 2 limit = 6.5k. Balance 6,435.   Promotion ends October 2016

My exit strategies for both houses are to 75% cash out refi after 6 month seasoning. I'm in the process right now of cashing out of the first one...paperwork in process, appraisal is getting done this morning, and I'll be closing on it hopefully early january. I plan to cash out 75k, so I will put all that money back into the HELOC. When this lender ran my credit it was around 700, and I took pride in my credit rating being 814 early this year (before I had done all this).

So, now I'm not going to get the best rate (~5% instead of 4.75, not horrible) and I'm going to pay 800 more in closing costs.  

Does it make sense for me at this point, to max out my HELOC and pay those credit cards down to about 30% of the limit? I could do that with the click of a few buttons. The HELOC rate is 2.99% annual until the end of the year, then becomes variable, but should be around 5% or probably a bit less, and it's interest only for the draw period (which is perfect in my opinion for my exit strategy).

Oh how you don't know what you don't know.  Experience means everything. 

 I figure that after I cash out of this house, I will do everything to make sure before I cash the next one out (eligible around April 2016) that my score is over 740.  And I figure maybe from now until then is the time to 'train' the credit scores, and bring my credit cards down to 30% of the limit, keep them there, and request limit increases even though I likely will not use these cards again unless they give me a 0% promotional opportunity.

Does it also make more sense, on the next house for example, open 2 or 3 0% cards that I could spread say, 15k across and have all the balances remain 30% or less?  Or will opening too many new credit lines also hurt?