Shrinking HELOCs

I have a line of equity extension with a credit card attached to it.  The line of equity is currently at $200,000.00. 

The problem is that there is a credit card attached with this  line of credit so that I can use it as a pay down the line of credit. 

Due to the credit card it is reporting as revolving credit instead of an installment.  This is killing my score.  It is like a credit card for $200,000.00 now maxed out! 

What can I do?  Can I get it to report as an installment account? 

Thanks so much,
Terry 

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Hello Terry,

Your HELOC is most likely being treated as an installment and not a revolving trade.  The cutoff is somewhere around $50k.  Yours is too high to be considered a revolving trade with regards to the Amounts Owed portion of FICO.

Funny you should ask about HELOCs.  We’ve talked before about how HELOCs can be used to win the credit card game.  What’s happening now is that lenders such as Countrywide are suspending draws on HELOCs in areas where property values have dropped significantly.  Los Angeles Times reported yesterday that “Countrywide Financial Corp. sent letters to 122,000 customers last week telling them they could no longer borrow against their credit lines because the total debt on the home exceeded the market value of the property”.  Chase Home Lending currently has a policy in areas of California that permits HELOC draws up to 90% of the homes value.  On Monday, that will reportedly be dropped to 70%.  Yikes!

So, why is this all happening?  ‘Cause the kneebone connected to the leg bone…

Thanks for the questions and hope this helps.

Paul 

(source= latimes.com/business/la-fi-loans1feb01,0,6255734.story)