 TITLE: How Does a Personal Line of Credit Affect Your Credit? CONTENT: How Does a Personal Line of Credit Affect Your Credit?\n------------------------------------------------------\nCredit reporting agencies typically track personal lines of credit as revolving credit, like a credit card account. Since a credit line is treated as revolving debt, both your maximum credit line limit and your balance affect your credit utilization. Your payment history is also reflected on your credit report, which could help or hurt your score depending on how you manage the account. Here's more detail on how a personal line of credit affects your credit:\n*   **Available credit on your personal line of credit can improve credit utilization**, which accounts for 30% of your FICO® Score☉ . To calculate your credit utilization ratio, divide your total credit limits by your total debt on credit cards and personal lines of credit. Quick example: If the credit limits on your credit cards and personal line of credit add up to $40,000, and you have $4,000 in combined debt, your credit utilization is 10%.\n*   **Debt on your personal line of credit adds to your revolving debt**, along with your credit card balances. Revolving debt raises your credit utilization. When credit utilization approaches and climbs above 30%, it has a greater potential to harm your credit; those with the highest credit scores tend to keep it under 10%.\n*   **On-time payments on your line of credit help your credit score**. Payment history is the most heavily weighted factor in calculating your credit score, accounting for 35% of your FICO® Score. On the other hand, payments that are 30 days or more late can stay on your credit report and affect your score for up to seven years.\n*   **A long-standing personal line of credit adds to your length of credit history**. However, a new line shortens your overall history of accounts as will closing a personal line of credit. A shorter credit history may lower your credit score.\nWhat if your bank closes your personal line of credit before your term is up? As these accounts become less common, some banks may stop offering them or even close accounts. If this happens, your available credit would shrink and your length of credit history could drop. A reduced credit limit could affect your overall credit utilization ratio. If this happens to you, contact your bank to find out what arrangements they might be able to make to help minimize the impact to your credit. END