Hello PersonalFinance!
Never been to this subreddit before, but figured I'd pop-in since ya'll may have the answer to the question I have...
So I have a house that doesn't have a mortgage on it except our HELOC. Long story short, we bought the house in cash, and then took out a $400k HELOC to renovate it. We only used a max of $130k of the line for the renovations, and have paid it down aggressively over the past few years as rates have risen up to the current level of 9% on the account... Yikes!
Fortunately, we have reached the point where we can pay it off! We chipped away at it the past four years, and have $10k left... And we happened to get some unexpected inheritance money last week, so we're going to eliminate that debt tomorrow because... 9%! Yikes!
That being said, I'm wondering if there's any credit score benefit to NOT paying off the HELOC fully versus paying it off entirely but leaving the account open. If I paid all of it off except for $1000 or $100 or even $10, is it beneficial for credit bureaus to see that we are continuing to make payments on the interest (however small the payments would be at that point). If we paid it all off but kept the account open (the draw period still has many years left), would credit bureaus view it less favorably since there isn't a monthly payment? Or if we paid it off fully and no longer had to make monthly interest-only payments, would it not matter (or even be beneficial) since there's an unused $400k line of credit sitting there?
We have great credit scores, so I'm looking to keep it that way. This house is in my name and it's the only pseudo-mortgage I have. Other lines of credit I have aren't nearly as big, so I'm just trying to keep my account looking good in the eyes of the credit bureaus. (I like churning through reward credit cards and would hate to be denied because my biggest line of credit no longer has a record of monthly payments all of the sudden.)
Thanks in advance for your help!
Submitted August 24, 2023 at 01:07AM by helocthrowaway1 https://ift.tt/EdJS3hN
