Frozen HELOCs Won't Hurt Your Credit Score

Falling home values lead to banks reducing or closing many homeowners home equity lines of credit (HELOCs). SmartMoney.com reports some of the largest mortgage lenders are reviewing HELOCs in areas where home values have dropped. Among these banks are Bank of America, Citibank, and J.P. Morgan Chase.

While a reduced or closed line of credit can pose a significant inconvenience, the effect on your credit score is one less thing to worry about. When HELOCs are reported correctly, they aren't factored into your credit utilization the way credit cards are. So, the reduction won't hurt your credit score the way a reduced credit limit or closed credit card would.

The watchout is for HELOCs that are not reported correctly. These could have an effect on your score. Review your credit report and dispute any inaccurately reported accounts with the credit bureau.

See the full article at Smart Money: Banks Suspending Home Equity Lines of Credit.

• How Your Credit Score is Calculated
• How to Get a Free Credit Report
• Disputing Credit Report Inaccuracies