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My HELOC reporting as inaccurately?

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So yesterday in my attempt to shopping for a lender to do a refinance, I spoke to this mortgage rep at a small bank sharing with her that my score should rise quite a bit quickly if I was to pay it down to 29% but this could take a while because I owe approximately 60k of an 80k line as I don't have that kind of cash. 

 
So she said if it is closed, meaning the draw period has ended and I can't use anymore of the remaining amount, you should call the bank and the CRA's to inform them that it needs to be reporting as a mortgage (M) not a revolving (R) line of credit. 
 
This makes total sense and always thought this is not accurate being that I no longer can borrow against it. Shouldn't this turn into an installment loan now? The 10 year draw period has ended.
 
It states on the credit report, "Credit Line no longer available - in repayment phase". So why should it show my utilization is 75% being that there is no available credit?!
 
So I called the lender and even the rep told me that it's not fair it's reporting as such. She then advised me to talk to the servicing department and also inform the CRA's. 
 
This will be paramount if they can remedy this because truly this is not accurate in that it is reporting as an "open" line of credit being that it's "closed". I don't have 75K of available credit. 
 
I'm on the phone with them now to see what can be done. I just don't want them reporting any limit because then it could show that I'm over the limit. They would need to report this as an installment loan and I'm not sure they're going to do this but to report that I have a 75% utilization is not accurate either. 

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don't assume your utilization paydown will lead to the mortgage FICO increase you anticipate.

 

so someone at some small bank wants you to call another bank to have the terms of your contract with the latter bank changed? what do the terms of the HELOC say regarding the repayment period? anything about conversion to a second mortgage? HELOCs are revolving not second mortgages. Have you ever read about Sisyphus?

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1 hour ago, hegemony said:

don't assume your utilization paydown will lead to the mortgage FICO increase you anticipate.

 

so someone at some small bank wants you to call another bank to have the terms of your contract with the latter bank changed? what do the terms of the HELOC say regarding the repayment period? anything about conversion to a second mortgage? HELOCs are revolving not second mortgages. Have you ever read about Sisyphus?

Yesterday got off the phone with the bank's HELOC customer service department and the rep agreed that this is not being reported correctly. She submitted it to the department that handles it and said, "How funny. I just got off the phone with someone that is having the same issue as you are." 

 

Basically she said this should not be impacting your score because it is in the repayment phase and you are not utilizing funds from "an available amount". 

 

She said that she can't promise anything but you will be receiving a letter in the mail regarding the result and she did put in the notes that it is impacting my credit score. She also gave me a reference number. 

 

Sisyphus in Greek mythology............Are you alluding that I'm asking for trouble here? 

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On 9/15/2020 at 6:20 AM, maverick9 said:

So she said if it is closed, meaning the draw period has ended and I can't use anymore of the remaining amount, you should call the bank and the CRA's to inform them that it needs to be reporting as a mortgage (M) not a revolving (R) line of credit. 

The credit bureau reports what the data furnisher provides.  Contacting the CRAs won't do anything for you.

 

On 9/15/2020 at 6:20 AM, maverick9 said:

So why should it show my utilization is 75% being that there is no available credit?!

What is "it" / what are you using to form this conclusion?  Credit reports do not show utilization percentages.

 

On 9/15/2020 at 6:20 AM, maverick9 said:

it's not fair it's reporting as such. She then advised me to talk to the servicing department and also inform the CRA's. 

Doesn't matter what's fair, what matters is what is correct.  This person is also incorrect about contacting the CRAs.

On 9/15/2020 at 6:20 AM, maverick9 said:

to report that I have a 75% utilization is not accurate either. 

If you divide the current balance by the original amount of the full credit line, what do you get?

 

Other thoughts:

 

1) It seems illogical to me that the account type for credit reporting purposes would change at the end of the draw period.  

 

Absent some other consumer on this board with direct experience, my next suggestion is to see if anyone has access to the Metro 2 guide and see if this scenario is specifically covered.  This isn't a guide that's offered to consumers, you'd have to find a data furnisher or someone with an illicit copy;

 

2) Is the original line amount still reporting?  Some common FICO models ignore balances on revolving lines with limits higher than the mid-$40,000s.  

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1 hour ago, cv91915 said:

The credit bureau reports what the data furnisher provides.  Contacting the CRAs won't do anything for you.

Thank you. 

 

1 hour ago, cv91915 said:

What is "it" / what are you using to form this conclusion?  Credit reports do not show utilization percentages

My Experian reports is showing the utilization which it is getting from my available limits vs usage amounts. My reports are showing this and from what the creditors are reporting.

 

1 hour ago, cv91915 said:

Doesn't matter what's fair, what matters is what is correct.  This person is also incorrect about contacting the CRAs.

Agreed. I won't be contacting them hence why I only contacted the bank. 

 

1 hour ago, cv91915 said:

1) It seems illogical to me that the account type for credit reporting purposes would change at the end of the draw period.  

Right but to saying I'm using "x" amount of an amount that was ONCE available but not longer and hence a utilization is still established is not accurate either. This is a tricky TL because it's technically a hybrid. It was once an account that acted like a CC. I could use as much of it as I wanted BUT FOR A CERTAIN PERIOD OF TIME (10 years). After that, it defaults to an installment loan at this point because I can no longer borrow from the once available limit SO it SHOULD reflect as so. These HELOC's are inadvertently impacting people's credit and is flawed. This has to be an oversight. This IS what happened to the account and the bank yesterday admitted this. So we shall see. 

1 hour ago, cv91915 said:

2) Is the original line amount still reporting?  Some common FICO models ignore balances on revolving lines with limits higher than the mid-$40,000s.  

Yes it is! That's my complaint @cv91915 and again, I just checked and Experian is showing "Account Status = Open" and "Usage: 72%", "Balance $54,000", "Credit Limit $75,000", "Account Type: Home Equity Line Of Credit - Revolving Terms", "Comments - Credit line no longer available - in repayment phase". 

Edited by maverick9

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1 hour ago, maverick9 said:

Thank you. 

 

My Experian reports is showing the utilization which it is getting from my available limits vs usage amounts. My reports are showing this and from what the creditors are reporting.

 

Agreed. I won't be contacting them hence why I only contacted the bank. 

 

Right but to saying I'm using "x" amount of an amount that was ONCE available but not longer and hence a utilization is still established is not accurate either. This is a tricky TL because it's technically a hybrid. It was once an account that acted like a CC. I could use as much of it as I wanted BUT FOR A CERTAIN PERIOD OF TIME (10 years). After that, it's an

 

loan because I can no longer borrow from the once available limit SO it SHOULD reflect as so. This IS what happened to the account and the bank yesterday admitted this. So we shall see. 

Yes it is! That's my complaint @cv91915 and again, I just checked and Experian is showing "Account Status = Open" and "Usage: 72%", "Balance $54,000", "Credit Limit $75,000", "Account Type: Home Equity Line Of Credit - Revolving Terms", "Comments - Credit line no longer available - in repayment phase". 

 

If the original credit line amount is reporting along with the balance, I would bet that this is reporting correctly.  But perhaps someone has access to Metro 2 to inform us otherwise.

 

Also, if my premise is correct and FICO is ignoring this TL for utilization purposes due to its $75k revolving "limit," the balance isn't hurting your score anyway.  

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1 hour ago, cv91915 said:

 

If the original credit line amount is reporting along with the balance, I would bet that this is reporting correctly.  But perhaps someone has access to Metro 2 to inform us otherwise.

 

Also, if my premise is correct and FICO is ignoring this TL for utilization purposes due to its $75k revolving "limit," the balance isn't hurting your score anyway.  

I know nothing about Metro 2 and never heard of it till now. 

 

It's showing right on the Experian's site that I'm using 72% usage. I don't understand how it couldn't be taking it into account but you've been around longer than I have with this credit world. 

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1 hour ago, maverick9 said:

I know nothing about Metro 2 and never heard of it till now. 

 

It's showing right on the Experian's site that I'm using 72% usage. I don't understand how it couldn't be taking it into account but you've been around longer than I have with this credit world. 

FICO doesn't run its algorithm against what Experian displays to you on their web site, FICO runs its algorithm against specific pieces of data that are present in your credit file.

 

Experian could create a new calculation that divides the number of inquiries by the number of name variations in your report, and then present you with the calculated result on their site.  FICO wouldn't use that either.

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Reports used by the lenders do not typically show percentages and are DEFINITELY not (generally) in the nicely packaged form that get shoveled off to consumers.  It would be a series of (by example) I1 or I0 ratings for an installment account that paid in a timely manner (I don't remember if the 1 is correct for on-time or if 0 is the on-time...there was also one for no data- Marv could fill in here). 

 

NO decision should ever be undertaken by an online report even if you are looking at the website of the furnisher. 

 

Concur with the above that calling the CRA does nothing other than delay things by opening a dispute that will be guaranteed to have been botched since the phone drone won't understand the issue (yet another reason to never dispute by phone).  Pawning you off to the four CRA's is just their way of kicking the can further down the street. 

 

You have found a contact with your bank that seems to be trying to fix things...give them time and understand it won't necessarily be an overnight resolution. 

 

As to METRO2, there USED to be a link to a copy somewhere around here.  It could have disappeared due to copyright issues though.  As I recall, it was originally found drilling down through the CDIA materials that are out on the interwebs...with the veracity of the source having been confirmed by Marv or someone else who was routinely involved in the decisioning process.  As I recall, there was some good discussion about BullsEye updates that came from those threads...perhaps a decade or more back. Much of the reporting stuff is still substantially the same so far as I know, just that there are a lot more products being offered for lenders and others to subscribe to (the white papers are a dry read but often informative). 

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I live with someone who deals with Metro2 for a living and I asked about this. The response was a frown.

 

HELOCs are installment loans. Your problem is relying on some small town bank "expert" who probably knows less about Metro2 than I've learned via overhearing conversations at expensive dinners hosted by EVPs from the CRAs over the past decades.

 

If you want the HELOC to report as installment refi it into the new mortgage you're shopping for.

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1 hour ago, hegemony said:

I live with someone who deals with Metro2 for a living and I asked about this. The response was a frown.

 

HELOCs are installment loans. Your problem is relying on some small town bank "expert" who probably knows less about Metro2 than I've learned via overhearing conversations at expensive dinners hosted by EVPs from the CRAs over the past decades.

 

If you want the HELOC to report as installment refi it into the new mortgage you're shopping for.

Makes good sense. Also interest rates are pretty darned low and given how long ago the HELOC was opened the OP should be able to save quite a bit of money.

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keep in mind that FICO 08 (and probably other versions) DOES score something akin to "utilization" of installment tradelines. While not used in the traditional meaning of utilization, your ratio of original balance to current balance matters for FICO scoring. There was a time when this was my only negative reason given (it was worded something like ratio of balance to original balance on mortgage).

 

It is also an extremely small factor in FICO scoring. But even if you get this tradeline reconstituted as installment, it is not as if the ratio of balance to original balance will no longer matter.

 

This tradeline will probably hurt you more for mortgage UW due to its impact on your DTI than its impact on your mortgage FICO. But this is where working with a smart mortgage broker who has access to numerous lenders can help guide you.

Edited by hegemony

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22 hours ago, hegemony said:

I live with someone who deals with Metro2 for a living and I asked about this. The response was a frown.

 

HELOCs are installment loans. Your problem is relying on some small town bank "expert" who probably knows less about Metro2 than I've learned via overhearing conversations at expensive dinners hosted by EVPs from the CRAs over the past decades.

 

If you want the HELOC to report as installment refi it into the new mortgage you're shopping for.

Exactly my intention @hegemony but my mid FICO 8 score is 656. As you know lenders use FICO 2, 4, 5 which I don't even know what those are but presume not far from my 656 score? I will get subpar rates at this point. Hence my attempt in getting my HELOC to report as an installment loan, my scores should increase significantly, THEN I will get the best (or much better) rates and terms on the loan. 

 

21 hours ago, hegemony said:

This tradeline will probably hurt you more for mortgage UW due to its impact on your DTI than its impact on your mortgage FICO. But this is where working with a smart mortgage broker who has access to numerous lenders can help guide you.

I use to do mortgages for a living and worked with several UW's. I have 3 very good friends who are mortgage brokers and also work with direct lenders. I speak to them weakly abou all things credit, TL's, DTI, etc. My best friend here and veteran member here on CB has been telling me since I started this journey back in March that the HELOC utilization is killing my score. The paper and online reporting summary all say, "High Credit Usage = 66%". So I don't know what to think with all this. 

Edited by maverick9

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1 hour ago, maverick9 said:

 

 

I use to do mortgages for a living and worked with several UW's. I have 3 very good friends who are mortgage brokers and also work with direct lenders. I speak to them weakly abou all things credit, TL's, DTI, etc. My best friend here and veteran member here on CB has been telling me since I started this journey back in March that the HELOC utilization is killing my score. The paper and online reporting summary all say, "High Credit Usage = 66%". So I don't know what to think with all this. 

It appears to be reporting correctly. The problem you're trying to solve can be attacked with CLI on cards, refi the HELOC as a second or into a first, pay off your debt. I hope your experts are telling you this. good luck.

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1 hour ago, maverick9 said:

Exactly my intention @hegemony but my mid FICO 8 score is 656. As you know lenders use FICO 2, 4, 5 which I don't even know what those are but presume not far from my 656 score? I will get subpar rates at this point. Hence my attempt in getting my HELOC to report as an installment loan, my scores should increase significantly, THEN I will get the best (or much better) rates and terms on the loan. 

 

I use to do mortgages for a living and worked with several UW's. I have 3 very good friends who are mortgage brokers and also work with direct lenders. I speak to them weakly abou all things credit, TL's, DTI, etc. My best friend here and veteran member here on CB has been telling me since I started this journey back in March that the HELOC utilization is killing my score. The paper and online reporting summary all say, "High Credit Usage = 66%". So I don't know what to think with all this. 

Since you used to do mortgage work, then you SHOULD know that the FICO 2, 4 and 5 models are the ones typically associated with mortgage underwriting AND that they can be wildly different than the bankcard models (such as the 8 and 9 models).  Those scores are readily available in the combo-pack that Fair Isaac sells on their website. 

 

You and any other person coming along who is seeking a mortgage is flying blind if you aren't even on the same playground.  You (and any others relying on the online formatting) are ALSO at a loss if you don't embrace the reality that the report the lender sees is NOT the report that YOU see online.  Pay the ~$50 for the full score package and at least know where you stand score-wise as viewed by a mortgage underwriting program...

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1 hour ago, maverick9 said:

The paper and online reporting summary all say, "High Credit Usage = 66%".

I don't recall seeing a calculation like this on any of my paper reports.  

 

But regardless,

 

23 hours ago, cv91915 said:

FICO doesn't run its algorithm against what Experian displays to you on their web site [or what your eyeballs see printed on a report], FICO runs its algorithm against specific pieces of data that are present in your credit file.

 

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2 hours ago, maverick9 said:

I use to do mortgages for a living and worked with several UW's. I have 3 very good friends who are mortgage brokers and also work with direct lenders. I speak to them weakly abou all things credit, TL's, DTI, etc. My best friend here and veteran member here on CB has been telling me since I started this journey back in March that the HELOC utilization is killing my score. The paper and online reporting summary all say, "High Credit Usage = 66%". So I don't know what to think with all this. 

 

I'm just going to offer that I fully appreciate your frustration.  HELOC utilization and it's treatment has been a thorny issue for FICO from the "get go". 

 

I think ultimately you're going to have to accept the fact that if this is the factor that's impairing your scores, it MAY BE unsurmountable in terms of seeking some type of reporting change that would remedy it.  You may need weight the cost/benefit of refi'ing into a fixed term HEL (yeah, I get that's really what you have now!)

 

First thing you really need to evaluate is how much of a new mortgage rate hike is implicit in the current reporting (making appropriate broad assumptions).  In any case, I second centex ... this is one of the few situations that warrant paying for a myFICO 3B report.  You're blind without that info.

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On 9/17/2020 at 9:46 AM, hegemony said:

It appears to be reporting correctly. The problem you're trying to solve can be attacked with CLI on cards, refi the HELOC as a second or into a first, pay off your debt. I hope your experts are telling you this. good luck.

Thanks for confirming this. Well, I have 2 secured cards (Disco and Cap 1) which I am waiting to graduate so I can see a CLI.

I have no debt to pay off. 

And yes, I will be refinancing the HELOC and my current 1st mortgage into one. 

 

On 9/17/2020 at 9:47 AM, centex said:

Since you used to do mortgage work, then you SHOULD know that the FICO 2, 4 and 5 models are the ones typically associated with mortgage underwriting AND that they can be wildly different than the bankcard models (such as the 8 and 9 models).  Those scores are readily available in the combo-pack that Fair Isaac sells on their website. 

 

You and any other person coming along who is seeking a mortgage is flying blind if you aren't even on the same playground.  You (and any others relying on the online formatting) are ALSO at a loss if you don't embrace the reality that the report the lender sees is NOT the report that YOU see online.  Pay the ~$50 for the full score package and at least know where you stand score-wise as viewed by a mortgage underwriting program...

Yes I know all the above. 

 

On 9/17/2020 at 9:58 AM, cv91915 said:

I don't recall seeing a calculation like this on any of my paper reports.  

 

But regardless,

It's online that I'm seeing this. All 3 online are showing this. I mainly use the paper reports but everything online is showing "too much usage - high utilization".

 

On 9/17/2020 at 11:03 AM, hdporter said:

First thing you really need to evaluate is how much of a new mortgage rate hike is implicit in the current reporting (making appropriate broad assumptions).  In any case, I second centex ... this is one of the few situations that warrant paying for a myFICO 3B report.  You're blind without that info.

Agreed. Thank you. Your saying to get the MyFico.com Advanced report?

Edited by maverick9

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1 hour ago, maverick9 said:

Thought you meant non mortgage items (CC's, school loans, etc.) 

The original reference was @hegemony's.  He mentioned three ways to put this behind you, one of which was paying off the existing HELOC debt.

 

https://creditboards.com/forums/index.php?/topic/623352-my-heloc-reporting-as-inaccurately/&do=findComment&comment=5818126

 

 

 

 

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