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High DTI ratio based upon student loan/limited acct types?

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RW771
Frequent Contributor

High DTI ratio based upon student loan/limited acct types?

Quick question. When I pull my credit report, my DTI ratio shows to be extremely high (in the 90% range) and I know it's due to my limited credit history and account types. Here is a quick run down of my credit situation:

 

Mortgage: None

Installment: 1 account (student loan)

Revolving: 1 department store card, 2 share-secured visa cards for credit re-building purposes

No judgments, liens, unpaid collections.

 

I've been struggling for the past year to rebuild my credit and not really having much luck. I know that my limited account type/credit history is a lot of my problem. I'm hoping to buy my first home sometime by the end of this year and wonder if my high DTI ratio due to my student loan installment account will hold me up. (Since being consolidated, the packets I have paid off are not reflected, only the unpaid amount, so it shows a balance of about $8200 owed out of a total limit of $8600).

 

Any advice is greatly appreciated!

05/31/2013 672 EQ (Fico), 03/08/2012 697 TU (Fico)

Closed on my first home 12/07/11! Officially a homeowner, thanks to this forum!!!

Message 1 of 6
5 REPLIES 5
Anonymous
Not applicable

Re: High DTI ratio based upon student loan/limited acct types?

Where are you getting the information that states your DTI is in 90% range?

Message 2 of 6
RW771
Frequent Contributor

Re: High DTI ratio based upon student loan/limited acct types?

I also subscribe to the Scorewatch monthly service through Equifax. I know this doesn't give me my true FICO score, but I like to see what all is on my credit each month and it updates me when things report each month (credit card payments, etc) and alerts me when my score changes. It gives you a breakdown based upon all your accounts what your DTI ratio is and lists what accounts you have by type, balance, etc. Just a supplemental tool I use along with myFICO.

05/31/2013 672 EQ (Fico), 03/08/2012 697 TU (Fico)

Closed on my first home 12/07/11! Officially a homeowner, thanks to this forum!!!

Message 3 of 6
Tazman81
Established Contributor

Re: High DTI ratio based upon student loan/limited acct types?

Just for some clarification.  DTI (debt to income) ratio is not displayed on your credit report.  What you are thinking about is credit utilization.  This is the amount of credit you have used in comparison to the amount of credit you have available.  For example, if you have a $1000 limit credit card, and you have a $900 balance on that credit card, then you have a 90% credit utilization ratio (which is not good).

 

Normally installment loans are not counted in the credit utilization ratio.  Do you have any credit cards that are near their limit or maxed out?  If so, you should try to get these paid down as quickly as you can.  Try to get to a utilization ratio of between 1% and 9%.

 

Now, let us go back to the DTI.  If you are trying to get a mortgage (or any other installment loan), they do look at your DTI.  That is the amount of income you having coming in, verses the amount that you have to pay out each month for bills.  Your student loan will be considered in your DTI and will affect your ability to get a mortgage.  Hope this clarifies the differences that you may be thinking of.  A decrease of your DTI will not necessarily result in a higher credit score.

 

A decrease in your credit utilization (if you are at 90%) would most likely result in a higher credit score.


Current Score: Eq: 823 Tu: 830
Goal Score: Eq: 850 Tu: 850

Wallet: PenFed Power Cash 50k | AMEX Blue Cash (AU) 49.5k | Cap One QSMC 26.5k | AMEX Platinum NPSL | USAA Signature Visa 25k
Message 4 of 6
Booner72
Senior Contributor

Re: High DTI ratio based upon student loan/limited acct types?


@RW771 wrote:

I also subscribe to the Scorewatch monthly service through Equifax. I know this doesn't give me my true FICO score, but I like to see what all is on my credit each month and it updates me when things report each month (credit card payments, etc) and alerts me when my score changes. It gives you a breakdown based upon all your accounts what your DTI ratio is and lists what accounts you have by type, balance, etc. Just a supplemental tool I use along with myFICO.



WAIT JUST ONE MINUTE.  I thought SW through EQ was a FICO?  It says it's a FICO.  It even has the little copyright circle.  ?????

STARTING: 11/24/10 EQ-584 EXP-648 TU04-595
CLOSED FIRST HOME 8/19/11 EQ-630 EXP-691 TU04-653
CURRENT: EQ-701 EXP-??? TU08-720
Message 5 of 6
MarineVietVet
Moderator Emeritus

Re: High DTI ratio based upon student loan/limited acct types?


@Booner72 wrote:

@RW771 wrote:

I also subscribe to the Scorewatch monthly service through Equifax. I know this doesn't give me my true FICO score, but I like to see what all is on my credit each month and it updates me when things report each month (credit card payments, etc) and alerts me when my score changes. It gives you a breakdown based upon all your accounts what your DTI ratio is and lists what accounts you have by type, balance, etc. Just a supplemental tool I use along with myFICO.



WAIT JUST ONE MINUTE.  I thought SW through EQ was a FICO?  It says it's a FICO.  It even has the little copyright circle.  ?????


The SW through the Equifax website is exactly the same product as what is sold here.

 

 

 

From a BK years ago to:
EX - 3/11 pulled by lender- 835, EQ - 2/11-816, TU - 2/11-782

"Some people spend an entire lifetime wondering if they've made a difference. The Marines don't have that problem".

Message 6 of 6
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