High Student Loans, Hight DBT

Anonymous · ‎11-09-2017

After making some mistakes in college, I racked up a lot of student loans. So much so that my debt to income ratio with student loans is too high and I couldn't qualify for a mortgage. My husband and I are buying a house and as a result the mortgage itself is going in my husband's name only. We're hoping that maybe in 5 years we can either sell and buy a new house or simply refi the existing one but I've got to figure out how to deal with these student loans in the mean time.

My first step is to consolidate all the loans into one. We'll continue making payments while I'm in school right now(paid for by employer). However is there a better way to deal with them so that it helps my DTI?

In addition to helping my DTI I'm also looking to increase my Fico 8 scores and I think that this is the reason my scores aren't rising as I would like them.

Anonymous · ‎11-09-2017

What's the age of your oldest account, open or closed? Doesn't matter what type of account.

What's your credit card utilization? List every single card limit and balance along with balance on any chargeoffs.

When was your most recent late payment reported?

Any collections or public records?

Anonymous · ‎11-09-2017

Age of oldest account is 14yrs. Bankruptcy 13 discharged April 2014. Last late payments are marked as 58 months ago but I'm in the process of disputing them because they were reported incorrectly. No chargeoffs.

I don't have a list of all credit cards and balances at the moment. I PIF every one except for 2 cards. One card is currently $1,450/$2,000 and is 0% for a year (will be paid off within a year for sure) as we had to finance a new washer and dryer. We took advantage of the 0%. The other card is currently $1,000/$3,500 and will be paid off next month. My other cards report 5% or less each month.

I also have an auto loan out at $35,000 that is a join account with my husband.

Anonymous · ‎11-10-2017

A few things to consider:

The number of accounts with any balance reporting (even $1) needs to be UNDER 1 out of 3. So if you have a total of 6 or fewer accounts, only report a balance on one. 7-9 accounts you can report a balance on 2 cards. 10-12, 3 cards can show a balance. This is because bureaus will ding your FICO for having a balance on too many cards (1/3 or more when it comes to some bureaus, 1/2 with others). Bring the number of cards that report a balance down so less than 1/3 of them show a balance.
That 0% interest is great but it's hurting your score because you're reporting 72.5% on it. I would work to get that below 68.9% before the next time it reports as that is a breakpoint. The next breakpoint is 48.9%. Being over 68.9% on one card is not danger zone but it's close.
The other card with $1000/$3500 is 28.5% which is "safe" actually -- anything under 28.9% shouldn't hurt your score too much. Paying it off of course is best!

The bankruptcy is pretty decent but I'm not familiar with BK terms unfortunately so I don't know the difference between "filed" and "discharged" -- others would be more useful there. I know that some banks want to see 5 years from discharge before they approve, and other banks require NO BK reporting at all before approval.

You don't look like you're in a bad shape to be honest -- bring that utilization down under 48.9% whenever you can and in the future try to keep it under 28.9% on every card, and don't report balances on 1/3 of your cards (or more) but fewer than 1/3. Your scores will come up a bit.

DollyLama · ‎11-10-2017

Edited, basic reply same as stated from ABCD above.

Anonymous · ‎11-10-2017

@Anonymous wrote:
After making some mistakes in college, I racked up a lot of student loans. So much so that my debt to income ratio with student loans is too high and I couldn't qualify for a mortgage. My husband and I are buying a house and as a result the mortgage itself is going in my husband's name only. We're hoping that maybe in 5 years we can either sell and buy a new house or simply refi the existing one but I've got to figure out how to deal with these student loans in the mean time.

My first step is to consolidate all the loans into one. We'll continue making payments while I'm in school right now(paid for by employer). However is there a better way to deal with them so that it helps my DTI?

In addition to helping my DTI I'm also looking to increase my Fico 8 scores and I think that this is the reason my scores aren't rising as I would like them.

It sounds like your main concern is your DTI. The folks who have responded thus far are focused solely on helping you with your secondary concern about your FICO score. That's fine -- just important that you realize that their advice won't help you with your DTI at all.

As far as your scores goes, it is true that adopting an AZEO approach (all cards at zero except one) will improve them, but you can do that 40 days before you next apply for credit and get its full benefit. Same with ultralow utilization. So if you are looking for a strategy that will build your score up over time, those will not help you. Since you already have plenty of cards (i.e. 3+) the only real thing that will help is getting further distance from the BK (far better will be when it falls off) -- and of course never having a late payment.