Standard & Poor’s recently issued a report (”Trends in U.S Residential Mortgage Products”) that included some interesting statistical data about HELOC borrowers:

The average FICO score for HELOC borrowers was 715 as compared to an average FICO of 667 for closed-end home equity borrowers. According to Wikipedia:

FICO scores range from about 300 to 850 and exhibit a left-skewed distribution with a US median around 725. A score above 720 is considered to be “good credit,” and a score below 600 is considered to be poor.

The average HELOC borrowers combined loan to value ratio (CLTV) was 86.70% as compared to nearly 98% for closed-end home equity loan borrowers. CLTV is the proportion of loans (secured by the home) in relation to the home’s appraised value.

These statistics are good benchmarks for persons considering a home equity line of credit. They also highlight one of the main strengths of the HELOC market - strong credit quality and low default rates. The S&P report notes that the quality of HELOC’s prompts many banks to retain these loans rather that sell them as is commonly done with other mortgage products:

“A majority of HELOC loans continue to be held on banks’ balance sheets. The prime loan characteristics and relatively high float for this product have contributed to bank retention.”