What Happens to Your Credit Score When You Close a HELOC?

“Closing something that worked well for you—even if you’re debt-free—can still leave a dent.” 

That’s not just tough love; it’s reality when it comes to closing a HELOC. A Home Equity Line of Credit may be gone by the time you finish reading this—but what about the impact on your credit score? It might surprise you. Experts, lenders, and credit bureaus all agree: shutting down that line of credit can have unintended consequences.

Related Article: IS IT HARD TO QUALIFY FOR A HELOC?

Let’s walk you through what really happens—and more importantly—what you can do about it.

1. The Upside That Sticks Around

First, breathe. If your HELOC has been in good standing, that positive payment history doesn’t vanish overnight. In fact, closed accounts can stay on your credit reports for up to 10 years—continuing to benefit you long after the account shuts down.

2. Credit Mix Takes a Hit

One of the more subtle effects? Your credit mix. Scoring models like seeing a healthy diversity of credit types—installment loans, credit cards, revolving accounts. If your HELOC was one of just a few installment or revolving accounts, closing it could narrow the mix, potentially hurting your score.

3. Your Available Credit Shrinks—Utilization Rises

Here's the math that bites:

• Say your HELOC had a $40,000 limit, and you had just $2,000 on a credit card with a $10,000 limit.
• Before: $50,000 available; $2,000 debt = 4% utilization.
• After closing the HELOC: $10,000 available; $2,000 debt = 20% utilization.
  
  

That spike—from 4% to 20%—happens without you taking on new debt, yet it can still pull your score down.

4. Shorter Credit History—Every Closure Counts

Every account contributes to the “length of your credit history.” That matters— it accounts for around 15% of your FICO score. When you close a HELOC, especially one you’ve had for years, you risk shrinking that average age and, with it, your score.

5. Sometimes, You’re Better Off Closing It

Not all impacts are negative. In some cases, paying off and closing a HELOC can reduce your overall “amounts owed” and even benefit your score. Plus, if your lender charges annual fees or you’re planning to sell your home, closing that line might make sense.

6. How Much Can the Hit Be?

The exact impact depends on your broader credit profile:

• If you already have long-standing accounts and low utilization, the hit might be minimal.
• But for someone with shorter credit history, few open accounts, or higher utilization afterward? The impact could be meaningful.

Real-World Comparison: Personal Lines of Credit

Ever closed a personal line of credit and saw a credit drop? That’s often because your available credit fell, upping utilization. One example explains: closing a line caused utilization to spike from 20% to 50%, costing up to 50 points. While HELOCs are treated differently—and FICO may exclude them from utilization—closing still removes that safety buffer.

7. Smart Strategies When Closing a HELOC

Let’s talk strategy. Closing isn’t automatically a bad move—but how you do it matters.

Actionable Steps:

Check your current credit utilization:

After closing the HELOC, what’s your utilization ratio? Can you pay down other balances?

Open a new account if needed:

Consider opening a non-secured line of credit (like a low-limit credit card) to replace the available credit and maintain mix.

Time it wisely:

Avoid closing it just before applying for a mortgage or car loan.

Communicate with your lender:

Understand any fees or reported consequences for prematurely closing the account.

Diversify your credit profile:

If the HELOC was your only installment or revolving line, ensure you have at least one other in place.

8. When Closing Makes Sense

Even still, there are valid reasons to close a HELOC:

• You no longer need that borrowing power.
• You’re preparing to sell your home and need to clear liens.
• There are ongoing maintenance or annual fees.
• You want to simplify finances and reduce temptation to borrow.

Just go in with eyes open.

9. Community Bank Angle:
How We Can Help

As a local bank, our role goes beyond lending.

We help our neighbors:

• Review how a HELOC closure might affect their credit.
• Plan alternatives if they want the access but with less impact.
• Offer other credit products to maintain a healthy credit mix and utilization.
  
  

10. Final Thoughts:
Choose with Confidence

Closing a HELOC is more than a financial checkbox—it’s a credit decision. You may hang onto positive credit history for years, but lose mix, reduce credit availability, or raise utilization.

The takeaway? Don’t act in a vacuum. Review your total profile. Ask yourself:

• What’s my utilization going to look like afterward?
• Is my credit history solid and diverse?
• Could this impact upcoming loan applications?

When in doubt, talk with your local lender. We’re here to help you close the line—and keep your finances strong.

Recap Table:
Closing a HELOC and Your Credit

Need Help?

Planning to close your HELOC soon? Reach out. We’ll walk through your credit profile, share strategies to protect your score, and even suggest alternatives that meet your goals with fewer surprises.

You’re smart to ask this question. And now, you’ve got the insight—and the game plan—to move forward confidently.