Can a HELOC hurt your credit score
A few examples of when a HELOC can adversely affect your credit score:When your credit history is blemished already.Â If you have a spotty credit history with missed and overdue payments, requesting a home equity line of credit and taking on additional debt will probably have a negative impact on your credit score. Credit reporting companies tend to view this as taking on additional risk.The "50/50 Rule."Â A HELOC with a line of credit that exceeds $50,000 is generally regarded as a type of second mortgage that can be helpful to your credit score, but a HELOC of less than $50,000 is usually viewed as a credit card with a large credit line. Hence, if your HELOC is less than $50,000 and your balances exceed 30% of your total available credit, this will be detrimental to your credit score.
Marc Jablon, The Jablon Team
RE/MAX Complete Solutions