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How FICO treats HELOCs

Jun 14, 2010 | | Comments Comments Off

Dear Liz: I refinanced a while ago, replacing my mortgage with a $193,000 home equity line of credit. The line of credit appears on my credit report as “revolving credit,” which makes it look like a large credit card debt, rather than a mortgage loan. What can I do?

Answer: It’s not clear that you need to do anything. The leading credit scoring formula, FICO, treats large home equity lines of credit as installment loans, even though they’re actually revolving accounts. The company that creates the FICO formula is secretive about what constitutes “large,” but a six-digit line of credit would almost certainly qualify.

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