Another DTI question

[ponderous]

I have 2 CC's, both in good standing.  I have a VISA with a $2000 limit that is paid in full.  I have a MC with a $5000 limit and a balance of $2200. I am trying to put every single available dime into savings for a DP right now.   My only other debt is my car that is scheduled to be paid off in less than 6 months.

Would my current useage be considered 31% on my cards and would this be too high when pursuing pre-approval? 

[Anonymous]

I think you are confusing DTI with credit utilization.

Your DTI is debt to income ratio, so it factors in your gross monthly income and monthly revolving/installment balances.

With your auto being paid off in 6 months and only having 2,000 in credit usage, it sounds like you have a very low DTI. I wouldn't worry, especially if you're going FHA. If conventional, those scores could hurt you.

[ponderous]

Yup....wrong terminology in the subject line. I am not questioning DTI as that is only .014% for me. I was wondering about the useage level only on the CC's. Thanks!

Message Edited by ponderous on 03-13-2009 10:25 AM

[Anonymous]

By right your credit utilization shouldn't matter when being pre-approved, however utililation does affect your scores so that could be an issue. That being said, 31% isn't really that bad and it looks that way judging from your scores.

[Anonymous]

Well credit utilization can hurt you a bit if you have a high DTI you could end up getting approved for less because they consider minimum cc payments. Obviously doesn't apply to the OP though

[Anonymous]

I agree It's just not the util that hurts you, it's the amound of debt. You can have a maxed out credit card with a $500 limit that wouldn't hurt much when compared to having a credit card with a $100,000 limit carrying a $25,000 balance. I guess you can say credit util can hurt you depending on the amount of debt you have, but even then the LO will probably tell you to pay off the debt rather than spread it out amongst your other cards to lower the util.

If the OP maxed out her 2,000 credit card she would probably still qualify as her minimum payment will be around $25 (just a guess).

Maybe i'm just thinking too deeply into this lol. End of Friday, yay.