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Frequently Asked Questions

How does a Home Equity Line of Credit impact my credit score?

A HELOC can impact your credit score depending on how you manage your account. Like any other loan or line of credit, your score can increase as you make your payments on time. It’s also beneficial to keep the balance of your HELOC relatively low compared to the amount you have available.

If you use your HELOC to consolidate higher-rate credit cards, your credit score may increase. If your balance on credit cards is relatively high compared to the credit limit available and you use your HELOC to pay down those cards, your credit utilization ratio will improve and in turn so will your credit score.

Learn about the Credit Utilization Rate and how it affects credit score from Experian.

Note that a HELOC balance is not part of your credit utilization ration because it is secured by your home. When applying for credit, a financial institution uses your FICO score (credit score used most often by lenders) which excludes HELOCs from credit utilization calculation.

When you apply for a HELOC or any loan, your lender will perform a hard credit inquiry. You score may decrease slightly, but the impact diminishes over time.

Learn about HELOCs and Credit Score from Experian.
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Frequently Asked Questions