Q. Is it possible to get my Line of Credit that’s reporting to the bureaus as a “Revolving” account type to reporting as an “Installment” account? It’s killing my FICO scores!
A. A “revolving” account is one where the balance fluctuates due to payments or withdrawals against the available credit limit. A credit card is the most common type of revolving credit account. An “installment account” is one where there is a loan made and the balance paid back over a predetermined period of time. An auto loan or mortgage are the best examples of this type of account.
I am guessing that the account you are describing is an equity line of credit against your home, in other words, a second mortgage. Your distress no doubt is due to the fact that the equity line is near the maximum allowable limit. Since credit bureau is reporting it as a revolving account, it is the same thing as having a maxed out credit card on your credit report. You are correct that this is indeed very damaging to your credit report.
Unfortunately, the credit bureaus merely parrot the information they receive from the creditor about an account, unless they have reason to believe that information is incorrect. Complaining to them will no doubt have little if any affect.
So what can be done about this? I can tell you that the exact same situation happened to me. Unfortunately, I was unable to convince the mortgage company holding the note on the equity line of credit that they should be reporting my account as an installment account. Despite this, I would encourage you to call customer service and ask that the reporting on your loan be changed to reflect an installment account. You have nothing to lose.
In my situation, I resolved the matter by refinancing my first and second loan into a single mortgage. If you are not able to do this because of too low a credit score or not enough equity available to qualify for a refinance, the only option available to you is to pay down the equity line. You are indeed caught in a Catch-22 if you cannot refinance, I am sorry to say.
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This is actually easily remedied. Under the FCRA/FACTA you have a right to have anything reported to a credit report to be “accurate and complete”. According to numerous legal resources a HELOC (home equity lines of credit) is a ” line of credit in the form of revolving credit in which your home serves as collateral. ” I copied and pasted that from the Federal Reserve Board’s website. An installment loan, I’m guessing is what you have has a fixed monthly payment and fixed term of X amount of dollars for Y number of months. Write a letter to the bank using 15 USC 1681s-2(b)(1)(C) as your basis and outlining the difference between installment and revolving credit… don’t take no for an answer.
By the way the difference between revolving credit and an installment loan is:
Installment has the same monthly payment every month. It has a specific number of months to run. For instance a mortgage 360 months (30 years) at $1000.00 monthly or a car loan 60 monthly payments at $400.00 a month. If all payments are made on schedule when the final payment is made the loan is over.
A revolving line of credit. A home equity line of credit (HELOC) or credit card for example. The monthly payment varies as the balance owed increases or decreases and the is no specific end date for it to be completed. It varies monthly according to monthly charges and/ or payments. Your credit limit may change, up or down according to the lenders policies and you could have this card for many years. There is no specific end/ termination on this type of account.