If your HELOC is recorded as a revolving line of credit, it may be difficult for you to take out a new mortgage or other type of loan. Holding a balance on a HELOC listed as a revolving line on your credit report will often reduce your credit score.

USA Today explains:

“…Watts says, “It isn’t always possible for Fair Isaac to distinguish a HELOC (home-equity credit line) from other types of (revolving) credit. It’s one of those vagaries between lenders and credit bureaus that frustrates score developers.”

His advice? If your home-equity line is frozen, pay it off before applying for a mortgage. “As far as your score goes,” Watts says, “the best way to treat any account that’s being reported as having a very high utilization rate is to pay down the account.”

Check your report to see how you home equity line of credit is listed.

See Also: 

How the HELOC Freeze Can Damage Your Credit Score

HELOC Freeze Damaging Credit Scores

Tags | FICO, FICO score, Heloc, heloc freeze, home equity line of credit