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I can't find out the method used on debt to income ratio

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GregB
Valued Contributor

Re: I can't find out the method used on debt to income ratio

Correct, That is a very good point.

 

That is why I always pay online and then confirm the payment is done.

Message 11 of 13
Anonymous
Not applicable

Re: I can't find out the method used on debt to income ratio

Sorry, I'm totally banging my head against a metaphorical wall. I check my bank accounts several times a day online. Do I need to pay before anything changes, or when the minimum payment or due date shows anything? Sorry.

 

I went ahead and paid it in full, I'll try to figure out what dates everything happens, since they never informed me. There was a problem with Capital One so I paid on with my checking accounts website billpay.

Message 12 of 13
haulingthescoreup
Moderator Emerita

Re: I can't find out the method used on debt to income ratio


@Anonymous wrote:

I've searched everywhere and found contradicting evidence about D:I (debt to income)

 

I'm 24 and had a ch. 13 bankruptcy discharge 06/26/09, I had 22k in CC debt due to irresponsibility, anticipated promotion, and medical bills. I've since applied for a motorcycle loan ($6k total with $4k down) and couldn't qualify, that was 1.5 years ago. I just got a Capital One card (no hassle rewards, $39 annually, $500 limit.)

 

My question is, if I use more than the 30% of the $500 that mint.com reccomends, will it negatively affect my credit score if I pay it in full each month?

 

I feel that the CC companies would only report an outstanding balance, that incurs intrest.

 

I've seen a yahoo answers response from "A person in the finance industry for 12 years" that says there's no problem in maxing and paying off a CC every month. But a CNN article claimed otherwise.

 

Does anyone have direct evidence one way or the other?

 

(BTW, my gas and groceries, which yield 2% cash back, come to just under $500/month.)


It's not debt to income. That's a factor that is looked at by lenders, especially mortgage lenders. They're looking at how much money you bring in vs how much you're obligated to pay each month. Smiley Happy

 

What you're asking about is reported revolving utilization, or "util": the balance reported divided by the credit limit.

 

What you want to do is control the reported balance. Almost all CC's report the new balance due that displays on your statement. Not the minimum, not the past due, not what might have accumulated since the statement dropped, but that number in the balance due department.

 

You can use your cards all you like, running them up to the max amount several times a month and then paying them off. All that matters for scoring purposes is the amount outstanding on the statement date. What you don't want is for them to report a nearly-maxed-out balance.

 

So what you want to do is go into each of your accounts and pull up your statements over the last 3-6 months. Some CCC's always post a statement on the same date each month, so every 7th or every 20th, whatever. Others vary a bit, maybe between the 12th and 15th, or the 1st and 4th. That's why you want to look at the dates on your older statements.

 

Once you know when each card is getting ready to report a new balance, you can log on and pay most or all of the amount due. Do this 2-4 days beforehand, although many CCC's will credit a payment on the statement date. You might want to stop using a card 4-5 days before you think the statement will post, so that all the charges will post before you pay.

 

If you do let a balance report, don't forget to go back in and pay again. It's really easy to do this, because you feel like you've made your payment that month, but that balance due on the statement still needs to be paid, in part or in full, by the due date.

 

In other words, what you want to do is learn your statement dates, and start thinking about them as your new due dates. As long as you pay a few days before the statement date, you'll have much lower amounts post to your reports, and your util will be much lower as a result.

* Credit is a wonderful servant, but a terrible master. * Who's the boss --you or your credit?
FICO's: EQ 781 - TU 793 - EX 779 (from PSECU) - Done credit hunting; having fun with credit gardening. - EQ 590 on 5/14/2007
Message 13 of 13
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