topic Re: Want to get first mortgage but Debt to Income in General Credit Topics

Want to get first mortgage but Debt to Income

Anonymous — Sun, 15 Nov 2009 05:14:03 GMT

Debt to income is tight. If I pay off a couple of larger balance credit cards will this help my fico also? And if so, by approximately how many points?

Thanks in advance?

Re: Want to get first mortgage but Debt to Income

RobertEG — Sun, 15 Nov 2009 05:52:01 GMT

Impossaible to say from what you have provided.

Debt to income is not a FICO factor, as FICO does not score anything to do with income.

It scores balance on each card vs. its credit limit.

That is what is called % utilization.

The reason that it is not possible to answer your question is that utilization of revolving credit has three factors.

Your overall % on all cards, which requires you to sum up the balances you owe on all cards, sum up the CL on all your cards, and then divide your overall CL into your overall balance. That is your overall % util, and amounts for about half or your scoring under FICO % util.

The remaining half of % util relies on making the same % util computation for each individiual card. A card with a $100 CL and a $100 balance does not score the same as card with a $5000 CL and the same $100 balance. And the number of cards reporting anything above a zero balance divided by your total number of cards gives you the percent of cards with reported balances, also enters into the remaining mix.

Give us your overall % util, the % util on each card, the total cards you have, and the number of cards reporting a balance of zero, and we may be able to help.

Re: Want to get first mortgage but Debt to Income

donkort — Sun, 15 Nov 2009 12:05:18 GMT

In my case, when my utilization went from 48% to 70%, owing to a lowering of one of my credit card's credit limits, my FICO went down 25 points. When the utilization went down to 65%, it went up about 10 points again. I would say lowering utilization will cause the FICO score to go up in the vast majority of cases. I'm basing my answer on my personal experience.