My Home Depot Project Loan Account is Hurting My Credit Score

“Dear Steve,

I buy and flip houses in Colorado and use the Home Depot Pro Loan on all my projects. They give a nice line of credit with a 7.99 percent interest and interest only payments for 6months. I usually pay it off before before that time period. I have done this 5 times and closed all 5 Loans.

My credit report shows a downgrade because I have opened so many accounts. Doesn’t closing these accounts show good credit IQ? What can I do to get past this



Dear Cara,

Well that’s an interesting situation and I think I can see what is happening by using the Home Depot Project Loan approach.

According to your credit report you are making frequent applications for new credit. That can be an indication of trouble.

In your case it is probably not but credit scores are determined by broad formulas and not individual considerations.

If you can, you might want to think about using this approach sparingly if you want to keep your credit score the best it can be. Alternatively if you want to keep using the “low cost” Home Depot credit you’d be a lot better off if they just let you put the new amount on one account than constantly opening and reporting new ones. As you can see “low cost” credit actually does come with a cost or consequence.

You might want to check with your local bank or credit union and see if you can qualify for a line of credit, typically secured by some real estate, like your permanent home. This would avoid the reporting issue as well.

You can model your credit score by using the free service from Credit Karma. I use it myself and love how you can see how actions can impact your credit score.

Please post your responses and follow-up messages to me on this in the comments section below.


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Steve Rhode is the Get Out of Debt Guy and has been helping good people with bad debt problems since 1994. You can learn more about Steve, here.
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