Help! Credit Score Dropped due to HELOC

Financing, Hard Money Lenders, Private Money
1

Hi – I just purchased in Jun '06, 3 duplexes with a 80/20 loan per duplex. The second loan, a HELOC, is for $19K (the first loan is $75K). I just ran my credit report to check my score for the next purchase, and discovered that my score went from 682 to 602 (middle score)needless to say I was shocked. Hopefully, someone out there can tell me how to get out of the HELOC, or to raise my score, or using some other methods to purchase my next properties. Any advice would be appreciated.

Thanks,
PR

2

Always protect yourself, never do a deal that could your personal reputation. I always form an entity, LLC, to protect myself, just incase the deal goes wrong my LLC suffer not me!

3

No seasoning with non owner duplexes to 100% ltv is going to be tough.

However, Your credit could have taken that drop because of the large amount of credit you absorbed. You’ve only had 1 reporting cycle since the purchase which is not nearly long enough for your credit score to recover from that dip. If you can’t find your financing, or can wait a few months, I think your score will creep back up.

I work with an investor whose score can fluctuate between 640-710 in a matter of weeks. She buys and sells a lot of houses. Her score always drops after financing a house and picks up after some timley payments. I hope this helped. Good luck.

4

Thanks, both answers were helpful. My loan broker said that they had this problem before where the second mortgage was treated like a maxed out credit card instead of a second mortgage. They are going to take care of it, and have them report it back to the credit beaureus to revise my report. Hopefully my score will go back up to a decent level. I’m crossing my fingers. If that does not occur, I’ll wait a couple of months to see if it creeps back up, and at the same time knocking down the payments on the 2nd mortgage.

Thanks

5

Unless you change your HELOC to a loan, you credit will not significantly improve even after making a few payments. I was in the same boat.

6

1.) Past payment performance 35%
2.) Credit utilization - 35%
3.) Credit history- 15%
4.) Type of credit use- 10%
5.) Inquires 10%

worst to good