How Does Home Equity affect your Credit Rating

Chief Tutor

I have a quick question. I bought a new house and had not sold my old house so to finance the purchase of the new house, I took out a first loan and a home equity loan for the difference. Once the home sold, I paid off the home equity loan so that it has no balance owed.

My question is the following: " Other than the $100 per year to keep the Home Equity Loan Open, how will this affect my credit report? Does the full value of the account affect go against my available credit?"

Please advise.

chow · Posted: Sat Jun 03, 2006 10:47 am Post subject:

It shows an available balance. If you're less than 50% of available limit, it's good. But if you have a bunch of available credit with tons of credit cards and loans that you can sink your self into a hole quickly, there will be a alert on your report-and it could affect your score. A HELOC is not a bad thing to have open and paid current. A ton of credit cards with no balances and high limits is not a good thing. We usually advise people to close what they don't use. Retail cards are killers.

Haplo · Joined: 20 Jan 2005 Posts: 2406 Location: Springfield, IL

yup, what she said :)

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