[DBCOX]

A couple of years ago, I took out a $90,000 Heloc in order to start a business. The business is now doing great, and I need to seriously begin paying down this debt (current balance $87,000). I also have a mortgage balance of $58,000 at 5.5%.

My FICO score is around 650 - the Heloc has killed my debt-to-credit ratio. I have practically no credit card debt with available credit of $42,000, but I do have a $17,000 balance on an unsecured line of credit ($20,000) with my credit union at 6%.

Should I try to consolidate all this debt into one loan by refinancing my mortgage? My home is worth about $335,000 - so I have plenty of equity to do so. Or, should I just transfer the Heloc into a home equity loan? The interest rate is so good on the Heloc right now I hate to mess with it, but at the same time I feel I need to get my credit score back up.

John... I would love to hear your recommendations on this. What would be the best way for me to go? Thanks!

[JohnUlzheimerOTM]

If the HELOC is killing your debt/limit ratio then it's being reported incorrectly by your lender. HELOCs are not meant to be included in that calc, just credit cards. I don't think it's the HELOC. The balance is high enough to trigger a "bypass" from the FICO score. In other words, they are assuming it's a HELOC. I think it's something else.

DBCOX, on Nov 12 2008, 01:48 PM, said:

A couple of years ago, I took out a $90,000 Heloc in order to start a business. The business is now doing great, and I need to seriously begin paying down this debt (current balance $87,000). I also have a mortgage balance of $58,000 at 5.5%.

My FICO score is around 650 - the Heloc has killed my debt-to-credit ratio. I have practically no credit card debt with available credit of $42,000, but I do have a $17,000 balance on an unsecured line of credit ($20,000) with my credit union at 6%.

Should I try to consolidate all this debt into one loan by refinancing my mortgage? My home is worth about $335,000 - so I have plenty of equity to do so. Or, should I just transfer the Heloc into a home equity loan? The interest rate is so good on the Heloc right now I hate to mess with it, but at the same time I feel I need to get my credit score back up.

John... I would love to hear your recommendations on this. What would be the best way for me to go? Thanks!

[DBCOX]

JohnUlzheimerOTM, on Nov 12 2008, 03:39 PM, said:

If the HELOC is killing your debt/limit ratio then it's being reported incorrectly by your lender. HELOCs are not meant to be included in that calc, just credit cards. I don't think it's the HELOC. The balance is high enough to trigger a "bypass" from the FICO score. In other words, they are assuming it's a HELOC. I think it's something else.

[DBCOX]

I beleive Experian is showing the Heloc as revolving credit - I'll contact them to find out for sure. The unsecured line of credit is not helping my FICO score either.

The FICO score aside, would you recommend at some point refinancing the mortgage, Heloc, and line of credit into a mortgage loan?

Thanks!

[JohnUlzheimerOTM]

A HELOC is a revolving line of credit so it should be showing up that way at all three bureaus. If not then that could be the problem. If you can find a lender that will allow you to roll all of those loans together in one refi, and they'll give you a better rate and competitive costs to close then it's not a bad idea to refi. Just stay away from exotic loan types.

DBCOX, on Nov 13 2008, 10:54 AM, said:

I beleive Experian is showing the Heloc as revolving credit - I'll contact them to find out for sure. The unsecured line of credit is not helping my FICO score either.

The FICO score aside, would you recommend at some point refinancing the mortgage, Heloc, and line of credit into a mortgage loan?

Thanks!