@iced wrote:
@SoCalGardener wrote:But there are times when my DTI ratio is high--like right now! I've spent a ton of money (all on credit cards) redoing my bathroom and buying a new refrigerator. If everything gets reported as they stand now, my DTI will suck big time! My utilization, both on a per-card and overall basis, will still be low (thanks to high CLs and no previous balances), but my DTI will be high.
I get it, that it's all academic in my case, since I'm not seeking or planning to seek any credit, big or small. Just saying that the general practice of using DTI as an indicator of being unable to pay bills doesn't *always* make sense.
And that's why it's not usually talked about -- it is an academic discussion if it's not being used. Why build a system or have indicators that account for a population that will never utilize it?
I see your point. But just as a reminder, what started this whole thing was this sentence in the article: "But your DTI is important because it helps creditors better understand your capacity to take on new debt and repay it as agreed." Its implication is that high DTIs may signal an inability to pay bills--but that's not necessarily true, like in my case, so it rubs me the wrong way. And creditors *do* take it into consideration without accounting for circumstances, such as having a low retirement income but money in the bank.
Sorry, this sounds very argumentative and that's truly not my intent. Just trying to get my point across!
@disdreamin wrote:
@dragontears wrote:So you want all general financial blogs/articles to include your outlier situation?
I didn't see anyone say that, but I also don't think the sitution is that much of an outlier. There are many retirees with sufficient investments that allow them flexibility in their spending well beyond what their typical income would suggest. Perhaps addressing this might be better as a separate article though, rather than an addendum to one about people still in the workforce.
As far as granting credit, it certainly seems as though considering investment accounts in addition to income might work better for anyone no longer in the workforce for whatever reason. I believe Chase offered a place for such accounts when I updated my income with them recently, and perhaps this type of situation is why. If someone has only modest annual income, but has millions in investments, it seems feasible that their ability to handle credit isn't well represented by just their "income".
Thank you. Very well said. 
My mom was a great example of little income but high assets. Her monthly income was less than $800 when she died in 2013, but she owned a 7-figure home outright, had absolutely no debt, did a lot of travelling and sightseeing, loved going to casinos to play the slot machines, loved eating out, and just generally lived a very comfortable life. To put things in perspective, $800 couldn't even rent a CLOSET where we live! 
Thankfully, her one and only credit account, Discover, based her credit limit on history, not income or DTI. This is the Discover card I've talked about before, which I 'inherited' when she died. I finally got its CL back into 5-figures, but it's still a far cry from where she had it. (They had to decrease the CL when they transferred it to my name, because my credit was still not great (recovering from my previous catastrophic illness), but I was grateful to have it.) She frequently ran the balance up on her Discover card, well into 5-figures; if there had been a snapshot of her credit at one of those moments, her DTI would've been OFF THE CHARTS! And, according to the sentence that started this whole thing, could mark her as unable to pay her bills...
@dragontears wrote:
@SoCalGardener wrote:
@iced wrote:
@SoCalGardener wrote:But there are times when my DTI ratio is high--like right now! I've spent a ton of money (all on credit cards) redoing my bathroom and buying a new refrigerator. If everything gets reported as they stand now, my DTI will suck big time! My utilization, both on a per-card and overall basis, will still be low (thanks to high CLs and no previous balances), but my DTI will be high.
I get it, that it's all academic in my case, since I'm not seeking or planning to seek any credit, big or small. Just saying that the general practice of using DTI as an indicator of being unable to pay bills doesn't *always* make sense.
And that's why it's not usually talked about -- it is an academic discussion if it's not being used. Why build a system or have indicators that account for a population that will never utilize it?
I see your point. But just as a reminder, what started this whole thing was this sentence in the article: "But your DTI is important because it helps creditors better understand your capacity to take on new debt and repay it as agreed." Its implication is that high DTIs may signal an inability to pay bills--but that's not necessarily true, like in my case, so it rubs me the wrong way. And creditors *do* take it into consideration without accounting for circumstances, such as having a low retirement income but money in the bank.
Sorry, this sounds very argumentative and that's truly not my intent. Just trying to get my point across!
So you want all general financial blogs/articles to include your outlier situation?
Outlier?! Um...I'm a Baby Boomer. Many of us have already retired (I did, early, due to illness), and millions more are in the process. I'd hardly call Baby Boomers outliers! 
Also, a simple addition or modification, like "in some cases" or "this may not apply to" or similar, to the sentence that sparked this, would be fine. It's the blanket statement tone that bothered me.
@SoCalGardener wrote:
@iced wrote:
@SoCalGardener wrote:A larger down payment? On what? I haven't bought anything, nor do I intend to, that would require a down payment. So that's not an issue.
Also, some of my creditors asked for [optionally], and I provided, my assets. So they have that on file and can use it to make decisions. Even with my low income, I've never had an issue getting higher CLs or new credit; I've noted before when people see "income too low" (or similar) as a denial reason, that I haven't seen that. I don't know if these are all related somehow!
If the point you're making is that you are able to afford anything you need because of accumulated investments, then DTI (and many other things, including your credit scores really) are going to be largely meaningless because you don't utilize any of those services. As long as you have a decent score and some form of regular income, it's sufficient. It doesn't matter what your DTI is in this case because your D is 0, which is why your situation isn't usually discussed.
If you're just talking credit cards, then DTI isn't that important for most people. Some creditors ask about the amount for your monthly housing payment, but that's only part of DTI and I've yet to have a credit card application ask me for anything beyond general income and that monthly housing cost. They don't ask for assets like a mortgage lender does. Most don't even ask for proof of income unless some red flag triggers in their system. If they do, it's because they can't make a risk determination, but generally don't have to.
But there are times when my DTI ratio is high--like right now! I've spent a ton of money (all on credit cards) redoing my bathroom and buying a new refrigerator. If everything gets reported as they stand now, my DTI will suck big time! My utilization, both on a per-card and overall basis, will still be low (thanks to high CLs and no previous balances), but my DTI will be high.
I get it, that it's all academic in my case, since I'm not seeking or planning to seek any credit, big or small. Just saying that the general practice of using DTI as an indicator of being unable to pay bills doesn't *always* make sense.
First, thanks @Elizabeth_FICO and Ben Luthi for the article.
I've not really paid attention to my DTI but I think it's similar to your situation. I'm on a 20+ year sabbatical more or less. Expenses are basic monthly utilities, food, fuel and some trivial luxury services. My income is suitably leveled to cover that and a little extra. I'll pull in some earned income from time to time working for a short while.
Anyhow, AFAIK the only time DTI might fiddle with my FICO is when/if I let the charges I make on cards report. I used to just PIF before statement cuts, tried AZEO for a short time out of concern for my scores bouncing around. My total card limits are around 2x my income so sometimes I need to spread spend out or pay card balances multiple times if I'm spending more than basic expenses -- however for a few months I have just let them report and not worried about it. Scores jumping around a bit but have remained as shown in my sig +/- a few points.
..other than that, it's not created any problems doing what I want or need to do so I just don't worry about it anymore.
I've no solid proof of it, but I'm playing around with the idea that letting spend report via statement cuts with follow up PIF may paint a picture that is somewhat more visible to casual credit inquiries that may be taken by those concerned -- as opposed to having $0 statements all the time or AZEO.
Ultimately I just don't care that much for the time being. At such a time I want to apply for another credit card I'll probably do AZEO for a month or two beforehand to try and peak my scores.
Are there other eyes on DTI that is of concern in this/your scenario?
..what sort of problems has it created, if any?
Thanks!
