Low income to debt ratio but credit still wont move up

[Anonymous]

I'm looking to get a mortgage but my credit isnt all that great. Ive been paying stuff off for awhile now but it seems its not going up fast enough. Basically when I was in college i just used a credit card and didnt pay it at all..not even the min balance, but for the last two years since i got my job i've been trying to get it up but it only goes up couple points each month it seems.

My scores are around 580 (last time i checked in september)

My salary is 60k a year

My only debt is 9k left on my car and 4k left on a student loan and only 100 (250 limit) on my credit card and i pay it off every month

Ive been paying everythign on time

My current expenses are just rent (600) ,cellphone and basic expenses.

Now I dont know exactly how mortgage companys look at each individual but it seems you need a score of mid 600's. If you look at my finacial situation i can afford a house with no problem but by my scores looks like i cant. I live bymyself, no wife or kids and want to purchase a house for around 80k..nothing serious just want to live in it, fix it up and sell it couple years down the road....investment.  When I purchased my car back in May of 08 it took the bank a couple times to finally approve me and the dealer said they did because of the job and knew I could afford it. Is there any chance that I can do that with a mortgage comapny too? Any help would be greatly appreciated.....Thank you

[XAVIERSMAMA]

Are the accounts listed the only ones you currently have open?  What does the balance on your CC report every month?  Even though you only have a balance of $100, your DTI is actually pretty high since your limit is only $250.  That's 40% util.  You need your balance to report less than $25 for optimum util.  You should spend sometime in the rebuilding forum.  Not knowing all that's going on in your account it seems like you have a lot of baddies affecting your score.  The rebuilding forum can help you with c/o's, CA's and gw letters.  It seems to me that you need to get some of the baddies removed to see a significant score increase.

[rockymtngrl]

I agree. You need to pull your reports and see exactly whats on them and then go over to the rebuilding credit forum for help. If you've paid everything on time for 2 years and no derogs in the past 2 years your score should be higher than 580, somthing has got to be holding them down and they are the experts on credit issues over there.

[Anonymous]

"your DTI is actually pretty high since your limit is only $250. "

DTI has nothing to do with utilization.... it's debt to income ratio therefore if he only has the one credit card payment plus a car and student loan payment the DTI it is pretty low based on his salary of $60K.

[Anonymous]

I'd recommend trying to get a second card.. possibly a secured credit card. Also, if you have a parent with a good credit history and a card that has been opened for a while with a low utilization see if they would possibly add you as an authorized user so you would benefit from the age of the card as well as the low utilization %.

Message Edited by kdoggflog01 on 10-29-2009 01:26 PM

[Anonymous]

I appreciate all the responses!!

First off i just want to say about my credit card....i put $100 each month on it just for gas and then pay it all off so its $0 at the end of the month

I am actually on my brothers card....he has been a member since 1998 and ive been on it for a few years now.

The only thing on my credit report that was hurting it before was a collection that has since been "agreed to pay" since June, i tried to get it off my report completly but that wasnt happening. Other than that there is nothing on there thats hurting except a few times i tried to get a credit card from best buy like 8 months ago. 

But to get back to my question....is a mortgage possible or no? I know i should go talk to someone about it 1on1 but its embarrasing...they look at you like a moron cuz you have bad credit. Thanks again for the help

[Anonymous]

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@Anonymous wrote:

But to get back to my question....is a mortgage possible or no? I know i should go talk to someone about it 1on1 but its embarrasing...they look at you like a moron cuz you have bad credit. Thanks again for the help

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It will be very tricky.  Very few lenders are accepting middle scores of 580 these days.  Most have moved onto 620+ requirements.  Your debt to income ratio will help and it would help if you have decent reserves.  But as others have said, I would hit the rebuilding forum first.  It sounds like you might be in the situation where your reports have more negative than positive.  If that is the case and you can't get rid of any of the negatives, then perhaps you can add another positive line or two.  But for the best advice hit the rebuilding forum.