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Advice on Whether a Large Unused HELOC Will Hurt Your Credit Sco

Mark Cappel
UpdatedFeb 23, 2008

I was told that we have too high of a home equity line of credit ($475k), but it was never used. Will it hurt my credit score?

Recently I was told that we have too high of home equity line of credit ($475k) But it was never used, we are keeping for emergency. Will it hurt my credit score? My FICO score is very good but my overall debt ratio is a little high when compared with my income.

A Home Equity Line of Credit (HELOC) is a great way for many homeowners to tap into the equity in their homes, allowing them t to pay off high interest credit card debt, to finance large purchases, or, as in your case, keep an open source of funds for emergencies or future plans. Obtaining a large HELOC should not have a negative impact on your credit score. Since home equity lines are considered revolving debt by the credit bureaus when calculating your credit score, the bureaus look at the ratio between your outstanding debt and your available credit, not just how much available credit you have available. Generally speaking, a debt to available credit ratio of 25% or less is ideal; a ratio higher than that may exert a negative influence on your credit score, with the negative influence increasing the higher the ratio becomes.

Since you have not used any of your available HELOC, it should lower your overall debt to available credit ratio, thereby improving your credit score. Be careful with your home equity line. Overspending is easy when you have a large line of credit freely available to you. Due to the temptation to overspend, you need to consider your spending habits before deciding to keep such a large credit line. If you can discipline yourself to use the line of credit only when truly needed, then maintaining a large equity line should not cause you any problems. However, if you have a tendency to overspend, having so much credit could cause you problems. As long as you do not use too much of the credit available on the HELOC, it should not have a negative effect on your credit score.

If a particular creditor is telling you that you have too much available credit for it to extend you a loan, the creditor’s decision may be based on that creditor’s individual lending guidelines. To my knowledge, simply having "too much" available credit is not the only factor considered when calculating a consumer’s Fair Isaac (FICO) credit score. FICO looks at the ratio of your debt to your available credit, not at the amount of available credit alone. However, if you feel that this large HELOC is negatively affecting your ability to obtain credit from a particular lender, you may want to contact the HELOC lender to request a reduction in your credit line, unless you truthfully feel that you may need the credit in the near future. $475,000 is a lot of credit to hold "in reserve;" even if you cut this credit line in half you will still have a significant amount of financial flexibility should you ever need it.

To read more about home equity lines of credit, I encourage you to visit the HELOC page. In addition, the offers a wealth of information about credit, credit reports, and credit scoring, available on our Credit Information page.

I hope that this information helps you Find. Learn. Save.




BBill, Nov, 2008
You should know that credit bureaus look at HELOCs in pretty much the same manner as they do credit cards, meaning both are considered revolving debts. Transferring from one to another is not going to help that much. What you have to keep in mind is the available credit to debt ratio. One should always use only about 30% of their available credit, so if you are careful in managing that, transferring some of that HELOC debt could help your score lightly. Read more about credit scored at
I purchased my new Honda and a new roof for my home and used my HELOC to pay for the car. The line of credit is $33,000 and the balance on the account is $25,000. I did this to save on taxes even though I could have had a smaller interest rate with the car dealer's finance plan. I have several credit cards where I owe absolutely ZERO. Would transferring some of the balance from the line of credit to my credit cards help my score improve?THANKSODELL