HELOC and FICO score...

[mrpaseo]

So I decided to apply for a HELOC as a security for the next 10-25 years. They required us to run a credit check (Wife and I) and as it turns out they sent us a letter telling us they did so and what our current FICO score is at one of the three major credit agencies. Between you and I, I don't really follow the FICO score as I try to not live my life on credit, rather I pay in cash whenever possible.

So, I open the wifes letter first (Not knowing what it was at the time) and I find that her FICO is 847... I about fell out, I never even heard of a FICO that high. Knowing that she has very little credit and what she does have she received from loans and CCs that I had that I added her (Joint accounts) I eagerly opened mine to find my FICO as 843... WTF! lol.

Needless to say, we close on our HELOC on Friday. That said, what ways have you used your HELOC? At this point, I don't even have a plan for it other than emergency fund. I expect to do some renovations in the future but at this point, I'm not sure. Any warnings I should be concerned about?

Thanks for reading,
Ray

[disneysteve]

Congrats on the scores. We are about to close on a refi and both of our scores were over 800 as well (though not quite as high as yours).

Why did you open a line of credit? You shouldn't plan on using debt as your emergency fund. You should use savings as your EF. If you don't have an EF, start one today.

What have we done? We took out a Home Equity Loan (not a line) about 12 years ago. We used it to pay for my car and to pay off some student loan debt because the rate on the HEL was better (and deductible).

Personally, I see no need to have a HELOC unless there is a specific expense in mind. If something comes up later, I can always open a line of credit or get a loan at that point.

[JoshuaHeckathorn]

Great scores! Serves as proof that you don't need a lot of credit to have great scores- just a reasonable amount that you manage wisely.

I agree with Steve about not using your HELOC as an EF. That's a bad idea. Save cash instead. I have a HELOC as well, which we've used for renovation expenses and then paid off.

[bjl584]

I've used one in the past to pay for a car.