topic Re: KNOWING MY ACCURATE DTI in General Credit Topics

KNOWING MY ACCURATE DTI

Anonymous — Mon, 26 Aug 2019 14:01:58 GMT

Hello once again, I found myself wondering how a lender finds your dti? As I look on my credit report, no such thing is listed. I have an estimated guess on what it may be but I'm not sure if that what the lenders are looking at. Where can I find close to accurate or completely accurate stats to give myself a look at what the lenders see. I have myfico, WalletHub, and Experian. Does those places have that info?

Re: KNOWING MY ACCURATE DTI

K-in-Boston — Mon, 26 Aug 2019 14:55:37 GMT

The CRAs do not supply income information to lenders, so DTI would never be listed. Lenders calculate your DTI using the information on your credit report and the income information you have supplied them.

The formula is total of all monthly payments / (annual income/12)

For example, let's take someone with a $100,000 annual income who has a $2000 mortgage, $500 auto loan, and three revolving credit cards showing a minimum monthly payment of $35 each.

2605.00 / 8333.33 = 31.26% DTI

Re: KNOWING MY ACCURATE DTI

Anonymous — Mon, 26 Aug 2019 15:20:11 GMT

Appreciate the info.....was mainly wondering if that's all they based it off but I was thinking the right thing.........thanks tho

Re: KNOWING MY ACCURATE DTI

grower1 — Mon, 26 Aug 2019 17:12:05 GMT

What if you use your credit cards to meet a minimum spend on a new card, or just charge to put usage on an existing card? For example if you charge 2 Louis Vuitton bags and pay them off in full before the statement cuts. Is that sort of thing calculated in DTI?

Re: KNOWING MY ACCURATE DTI

HeavenOhio — Mon, 26 Aug 2019 17:34:22 GMT

@grower1, your bag purchase wouldn't affect DTI. When DTI is calculated, minimum credit card payments are used. Because there's no debt, there's no minimum payment.

Re: KNOWING MY ACCURATE DTI

grower1 — Mon, 26 Aug 2019 19:44:35 GMT

Thank you @HeavenOhio!

I always wondered how it worked and how DTI would be calculated if I ever applied for a loan.

I've never had any loans (car/morgage/personal). I do have about 10 cards, AZEO so I let a small amount report on one. I have about 52k in revolving credit lines + Amex Gold 30k POT.

I don't pay any utilities. I'm on my lease, for monthly rent ($2,500) but I don't really pay that either, although I have in the past to meet spend requirements. My spouse pays for car payments, insurance, groceries etc.. Maybe my DTI is zero or really low.

Re: KNOWING MY ACCURATE DTI

RobertEG — Mon, 26 Aug 2019 22:39:00 GMT

Your credit report is never used as the source for calculation of a debt to income ratio.

Income is not in your credit file, and debt only includes those creditors or businesses that have voluntarily chosen to report their account to the CRAs.

Credit reporting/scoring uses similar ratios, but they are not debt to income ratios.

Scoring of revolving debt uses the ratio of current balance divided by credit limit, and installment debt calculates the ratio of current balance divided by initial loan amount. Those ratios are sometimes incorrectly referred to as DTI, but they dont include either all debts of current income.

If a given creditor is using debt to income ratio as an approval or evaluation factor, such as it common with high principal amounts of credit, such as mortgages, the creditor will request disclosure from the consumer, usually in the form of a signed statement.

Re: KNOWING MY ACCURATE DTI

Anonymous — Mon, 26 Aug 2019 22:52:23 GMT

experian has a DTI calculator when you log into it

Re: KNOWING MY ACCURATE DTI

Anonymous — Mon, 23 Sep 2019 14:15:08 GMT

@creds
Thanks for the info about Exp, I have a account with them but had to log in on desktop to see the dti chart. With my income it says I'm at 11%

Re: KNOWING MY ACCURATE DTI

itsxluigi — Wed, 25 Sep 2019 14:22:48 GMT

@Anonymous wrote:
@creds
Thanks for the info about Exp, I have a account with them but had to log in on desktop to see the dti chart. With my income it says I'm at 11%

Be aware, I just went to check mine with my Experian account. I have 1 credit card reporting a balance, and 1 car payment. My total monthly debt should be no more than $450. Experian is saying $704. I went through and looked at all my open accounts one at a time. It's showing monthly payments on accounts that haven't carried a balance or even seen a charge in almost a year.

Re: KNOWING MY ACCURATE DTI

Anonymous — Wed, 25 Sep 2019 16:22:16 GMT

DTI to me has always been rather bogus, as not nearly enough information is used. As others have mentioned above, the "debt" portion of it considers what's on your CR. So, someone with a mortgage has a greater DTI than someone paying and equal amount of rent when all other things are equal (for example). As we all know, there are tons of expenses that don't show up on one's CR. In fact, most of them including but not limited to utilities, car insurance, phone, cable/internet, etc. and then of course things that aren't "monthly" payments that are necessary like food, gas, etc. I don't know, I just always find DTI to be pretty silly when very often it doesn't include the majority of where one's income actually goes.

If you were to go off of just my CR accounts and my stated income, my DTI would appear to be 19%. If you take into account all of my monthly expenses, DTI is close to 40%.

Re: KNOWING MY ACCURATE DTI

Anonymous — Wed, 25 Sep 2019 16:32:12 GMT

But isn't that why they look for people to be around 30%? As I'm sure Lenders already know about the unreported items like utilities and also realize people have to eat. Being at or under should be an indicator that a person has sufficient income for said new Loan.

The only real problem lies with a rather large unreported obligation, which could impact their ablity to repay if something were to cause a reduction in income or a large unexpected expense. People with hidden TL's for example, if that monthly payment were fairly high.

Re: KNOWING MY ACCURATE DTI

Anonymous — Wed, 25 Sep 2019 20:56:35 GMT

@Anonymous wrote:
But isn't that why they look for people to be around 30%? As I'm sure Lenders already know about the unreported items like utilities and also realize people have to eat. Being at or under should be an indicator that a person has sufficient income for said new Loan.

The only real problem lies with a rather large unreported obligation, which could impact their ablity to repay if something were to cause a reduction in income or a large unexpected expense. People with hidden TL's for example, if that monthly payment were fairly high.

I mean, no open loans on one's CR and zero reported CC balances (no minimum payments due) would put someone at 0% DTI, correct? That would be 0% DTI regardless of income (as long as there's some income)... I know tons of people that rent (more than pay a mortgage for example) and many of them are paying $1000, $1500, $2000/mo that shows up no where on their CR. Such a person could be at 10% DTI on a high income or be at 50%-70% or higher DTI if they've got a low income and no one would know. That's just talking rent and nothing like utilities or other expenses.

I don't know, the whole DTI thing just seems bogus to me, although it must "work" to some degree or it wouldn't be used.

Re: KNOWING MY ACCURATE DTI

HeavenOhio — Thu, 26 Sep 2019 01:23:28 GMT

Rent is counted toward DTI. So is child support. Utilities generally aren't counted.

How to calculate your debt-to-income ratio (Wells Fargo)

Re: KNOWING MY ACCURATE DTI

Anonymous — Thu, 26 Sep 2019 01:47:01 GMT

@HeavenOhio wrote:
Rent is counted toward DTI. So is child support. Utilities generally aren't counted.

How to calculate your debt-to-income ratio (Wells Fargo)

"When you apply for credit, lenders evaluate your DTI to help determine whether you can afford to take on another payment."

But if your rent isn't on your CR (which for the majority, it isn't) it wouldn't be seen by lenders. Sure from a MR standpoint if one is going for a mortgage or something that would likely be disclosed, but in the majority of cases since it isn't part of the CR it isn't considered.

Re: KNOWING MY ACCURATE DTI

HeavenOhio — Thu, 26 Sep 2019 05:22:44 GMT

I'm the last one to know anything about loans. But wouldn't the borrower provide rent and/or mortgage information like he would for a credit card application or a CLI request?

Re: KNOWING MY ACCURATE DTI

Anonymous — Thu, 26 Sep 2019 17:40:16 GMT

Yes. Whenever I've filled out an app, they always ask for Mortgage/Rent payment. However, I guess since Rent doesn't show up one could fib and not disclose it. A Mortgage can be verified via HP on CR, but not rent. So there probably have been some people who did not report their rent payment in in an attempt to skew DTI in their favor.

Although once the lender requests bank satements and sees a rather large monthly payment, it might raise a red flag.

Re: KNOWING MY ACCURATE DTI

Anonymous — Fri, 27 Sep 2019 02:43:24 GMT

@Anonymous wrote:

Although once the lender requests bank satements and sees a rather large monthly payment, it might raise a red flag.

Unless one pays their rent in cash. I did that for all the years I paid rent.