Does an unused HELOC hurt a credit score?

17 years ago

Hi again. We are signing for our HELOC on Friday but not intending on using it for almost a year. We just wanted to get it now so that will be one less thing to worry about. I was wondering how an equity line effects a credit score though. My hubby has a 765, how much can we expect it to drop, if any? Also, will a credit score lower from just taking out a HELOC or does one have to take money from it for it to have an effect? Thanks!!

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Comments (5)

kpfeif
17 years ago
If I understand this correctly, the HELOC is an available line of credit and will count against your credit score. Even though you haven't used it, it's there and available to you. However, it is a SECURED line of credit, so it won't be like you have a 20,000 open credit limit on a credit card.
kec01
17 years ago
Having it there will affect your scores. I don't know how much, though.
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Here is my 'guess' and it is just that...a guess. Concerning 2 and 3. refinanced my mortgage early in 2005 to a very good rate. This now shows as a 'new' loan, and it has not been paid down much in one year, by their way of thinking. I have about $160K in untapped equity (no HELOC or anything), in what remains If I understand you correctly, you have equity in your home, but have not applied for a HELOC on it. Right? They don't have any idea really then that you have that equity...right? Now this is just a 'thought' but you might want to pay off the car loan with some of that equity in your home, and then concentrate all your efforts toward paying off the HELOC. I imagine there will be some who will say 'NO' to doing that though. I applied and was approved for a HELOC a few years ago, but have never tapped into it. I 'thought' I might want/need it to get the driveway paved, but found another way that was interest free for a year and that was all I needed. I might add that I have no loans 'open' at this time and no revolving credit 'owed', as CC are paid off each month. My guess is that once the car loan is paid, that your score will improve significantly. In the meantime your score is a high B, which is still miles above the norm. Sue
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Gina_W
17 years ago
Hasn't affected mine. I was just sent my score and it's higher than ever - I've had an open HELOC for over a year.
jenna1
17 years ago
We've had an open HELOC for a couple years that we've never touched. The only ding on our credit score was when they did the original credit check when we applied, but that was a couple years ago.

About three months ago we had our mortgage broker run a credit check to see how things were going and to make sure there weren't any surprises. Our credit scores have gone up. I'm sure that has alot to do with having all our bills paid off, other than mortgage, and making sure that we pay off any charges we put on our charge cards in one to two months after charging.

In our case it sure doesn't seem to have hurt our credit at all.

Jenna
talley_sue_nyc
17 years ago
This comment has nothing to do w/ an open but unused HELOC, just with HELOC & credit scores in general.

I don't know how it affected my credit score, bcs I didn't pay to check, but AmEx lowered the credit limit on my Blue card because I was close to the top of my HELOC and my other credit card (not on theirs, I don't think, but maybe--I'd just charged plane tickets which sent it up near the top in a hurry; I normally pay it completely off).

My HELOC was only for $50k, and I was at about 80% of that, as well as my other credit card.

I wasn't behind on any payments--I was just using my HELOC to its fullest.

Does an unused HELOC hurt a credit score?

Comments (5)

kpfeif

kec01

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