FYI- I just found this on Bankrate
Does credit utilization of a HELOC negatively impact a credit score? As with any loan or revolving account, using a HELOC account will impact the person's FICO score, but often the amount of impact is small. That impact can be positive or negative depending on a variety of things, including the account balance, payment status and what other information is on the credit report.
What happens to a credit score when a consumer uses a HELOC to consolidate credit card debt? (Let's assume that they don't cancel the credit cards.) That depends on a variety of factors, too. Just opening the HELOC will ding the person's score a bit. If the new HELOC's balance is close to the loan's limit, that could also ding the score. On the other hand, paying off high balances on credit card accounts will usually help the person's score. And leaving the card accounts open may help the person's credit utilization rate, which is good for the score.
Should homeowners get a HELOC for more than they need so they don't "max out" the loan? It won't hurt the person's FICO score to have a higher loan limit. This strategy might be OK if the higher limit doesn't seduce the consumer into using more credit than he or she can comfortably repay -- a big if. Another obvious danger is that with HELOCs, the house itself is at risk if the loan payments can't be made.
|
