Credit score is 636 but Debt ration is 75%,

[sweets2323]

I applied with Power One Financial Credit union and I was denied. They use Equifax.

My score was 636 but my Debt Ratio was 75% and I has recent late.

I dont think it was recent it was like 6 months ago, but I guess they consider that recent.

They didnt counter offer, so there was no reason for me to add a second person to the application after.

With the CU you cant have a debt ration over 50%

I am now going to try and have enterprise rental car company pull my credit.

I am trying to buy a car..

Power one told me that I should try other places. but make sure that its in the same 30 days so that my score wont move.

I hope enterprise doesnt give me a high interest

Funny thing, I have a score alert on my account with Equifax and it shows that My Credit score is much less than what the CU pulled

Enterprise said they work with 20 banks... But its only pulled one time ... they will submit it to those banks to get me a better deal

Any comments please.

[JM-AM]

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@sweets2323 wrote:

I applied with Power One Financial Credit union and I was denied. They use Equifax.

My score was 636 but my Debt Ratio was 75% and I has recent late.

I dont think it was recent it was like 6 months ago, but I guess they consider that recent.

They didnt counter offer, so there was no reason for me to add a second person to the application after.

With the CU you cant have a debt ration over 50%

I am now going to try and have enterprise rental car company pull my credit.

I am trying to buy a car..

Power one told me that I should try other places. but make sure that its in the same 30 days so that my score wont move.

I hope enterprise doesnt give me a high interest

Funny thing, I have a score alert on my account with Equifax and it shows that My Credit score is much less than what the CU pulled

Enterprise said they work with 20 banks... But its only pulled one time ... they will submit it to those banks to get me a better deal

Any comments please.

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@Having your debt ratio @ 75% is high.

First thing I would have to do is ask myself how badly I need a vehicle? Second thing I would have to ask myself is can I actually afford a new debt?

It is just a little obvious to creditors/lenders that you may be over extended since you are not bringing down your current debt obligations and are a risk. This is not saying that creditors/lenders will not offer you credit, just that you will have limited opportunities and possibly higher interest rates because of the risk.

IMO I would look into a buying a used older vehicle for cash. Applying the money you were going to use for a vehicle loan to pay down my current obligations. Once you have paid off your current obligations or at least brought it down to about 15% then maybe look into purchasing a new vehicle at that time.

I am sure this is not anything you wanted to hear, but IMO you are putting yourself into a bad situation by purchasing vehicle and putting yourself further into debt.

Good Luck to whatever you decide.

[sweets2323]

The thing is. All I have on my credit report is a mortgage of 58000, pmts are 800 a month and a Line of cerdit of 25000, pmt of 250 a month 2 cards pmts 90 a month and 45 a month.

that is it,.

I  make 35000 a year

I dont pay any of those bills, my husband does. but it counts as I do because, my name is on it and not his,. but over all if I was paying it, is that really a lot of debt?

[JM-AM]

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@sweets2323 wrote:

The thing is. All I have on my credit report is a mortgage of 58000, pmts are 800 a month and a Line of cerdit of 25000, pmt of 250 a month 2 cards pmts 90 a month and 45 a month.

that is it,.

I  make 35000 a year

I dont pay any of those bills, my husband does. but it counts as I do because, my name is on it and not his,. but over all if I was paying it, is that really a lot of debt?

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Mortgage payment $800 a month

Line of Credit $250 a month

1 Credit Card payment $90 a month

1 Credit Card payment $45 a month

Totals = $1185 a month in debt.

Your wages are $35000 a year

20% (assumption which is probably lower then you pay) towards taxes = $7000

Leaves you a net pay of $28000 a year

$28000 a year divided by 12 = 2333.33 a month

On these numbers you are using more then 50% of your total net pay to pay off current obligations at a minimum payment.

Let us put it all into simple math;

After your current obligations you have 1148.33 left over.

Add a car note for $20000 at decent rate of 5% would give you a payment of about $377.42 a month for 5 years (60 months).

Add car insurance full coverage at an assumed price of $1200 a year (can be more or less) gives you a payment of $200 a month.

Add fuel to put into vehicle at a low cost of $50 a week (can be more or less) gives you a payment of $200 a month (based on a 4 week month only).

Add basic maintenance oil changes every 3 months $35.00 gives you a payment of 11.66 a month.

This gives you approximately $789.08 a month in additional debt.

Subtract that from your left over net pay of $1148.33 leaves you with $359.25 left over.

Not enough left over in the creditor/lenders (underwriters) view for general expenses, such as food, maintenance on home, etc etc...

[sweets2323]

that  makes a lot of since.

I drive a 2000 maxima with 205000 miles  on it with three kids. I am so in a need of a new car. Sick of having to fix this vehivle every month.

I dont want to get another vehicle with more than 35000 miles. URG!! I did my taxed and I will be getting 7500 and I dont want to use it for a car with high miles. I wanted to save it. since every year  I have to use it for something.. URGGGG Decisions

But in reality HE will be oaying the insurance. but All I pay are the Utillities and the food. Bu I can see what the creditors will think. You have been real helpful!!!

[JM-AM]

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@sweets2323 wrote:

that  makes a lot of since.

I drive a 2000 maxima with 205000 miles  on it with three kids. I am so in a need of a new car. Sick of having to fix this vehivle every month.

I dont want to get another vehicle with more than 35000 miles. URG!! I did my taxed and I will be getting 7500 and I dont want to use it for a car with high miles. I wanted to save it. since every year  I have to use it for something.. URGGGG Decisions

But in reality HE will be oaying the insurance. but All I pay are the Utillities and the food. Bu I can see what the creditors will think. You have been real helpful!!!

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Maybe its time he uses his name to purchase things, instead of you baring all the risk.

Good Luck 

[Anonymous]

how much CC debt do you have?

if you pay down $7500 worth of CC debt when you get your refund, you'll be saving a minimum of $75/mo in interest alone.  and that's at a conservative apr of about 12%.  if your CC apr is higher, you're paying more than that.

my wife had $6000 in CC debt and we were paying $60/mo in interest at 11.99%.

also, when you pay down your CCs, your fico will jump up.  you'll see big fico gains when you cross below 50%, and 25% for sure with incremental gains in between.  fico does not care about past utilization (debt/credit ratio), only current util.

[Anonymous]

in regard to saving... you will lose money if you save it instead of paying your CC debt.  the very best yielding accounts pay around 4-5% (reward checking with hoops to jump thru).  your credit card debt is costing you at least 10% unless you have a killer deal.  so for example, if you gain 5% in savings, but pay 10% in CC interest, you're losing 5%.  pay your CC first.

[Anonymous]

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@Anonymous wrote:

in regard to saving... you will lose money if you save it instead of paying your CC debt.  the very best yielding accounts pay around 4-5% (reward checking with hoops to jump thru).  your credit card debt is costing you at least 10% unless you have a killer deal.  so for example, if you gain 5% in savings, but pay 10% in CC interest, you're losing 5%.  pay your CC first.

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STOP!!!

Unless you have establised an emergencey fund or cash on hand fund do not just pay yo credit cards off. Your credit card company can close your account or lower your limit at any time. You could easily pay $1000 extra over 3 months, have a catastrophic even where you need the cash and find that your credit line does not exist anymore or can be drawn on.

A two pronged approach of paying and saving is recommended

[Anonymous]

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@Anonymous wrote:

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@Anonymous wrote:

in regard to saving... you will lose money if you save it instead of paying your CC debt.  the very best yielding accounts pay around 4-5% (reward checking with hoops to jump thru).  your credit card debt is costing you at least 10% unless you have a killer deal.  so for example, if you gain 5% in savings, but pay 10% in CC interest, you're losing 5%.  pay your CC first.

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STOP!!!

Unless you have establised an emergencey fund or cash on hand fund do not just pay yo credit cards off. Your credit card company can close your account or lower your limit at any time. You could easily pay $1000 extra over 3 months, have a catastrophic even where you need the cash and find that your credit line does not exist anymore or can be drawn on.

A two pronged approach of paying and saving is recommended

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no need to yell.  i assumed emergency fund was a universal given.  i meant Saving with a capital S, not setting aside $$ for emergencies.