Credit question: Income to Debt ratio?

I have a question regarding my credit, FICO score etc..

I have student loans totalling ~ $35000,

about 9000 of that are seperate non federal loans the other 26000 are consolidated federal loans with citibank.

When considering income to debt ratio, how are they calculating this? on a monthly basis? I am paying ~ $200.00 a month on these student loans over a long fixed period of time obviously. My income is totalling ~3000.00 take home a month. I also have a loan with HSBC totalling 4500, paying about 150 a month for that. How does this debt fit into my debt to income ratio?

I%26#039;m trying to get below the 38 percent d/i ratio to qualify for a mortgage. I also have a few credit cards totalling about 3500 bucks, I have the money to pay them off (which I will this month)

How do these fit into debt to income ratio?

I%26#039;m considering a mortgage in about 9 months and would like to upgrade my fico.

Credit question: Income to Debt ratio?

You are confusing 2 separate issues. Debt to income ratios are figured by adding all of your minimum payments in a given month (credit cards, car payment, installment loans, anything that appears on a credit report) plus your mortgage payment inclusive of taxes and insurance and dividing by your gross monthly income(before taxes). This has no affect on your FICO(credit) scores. Part of your FICO score(30%) is affected by your debt to credit limit ratios. This is derived by adding all of your credit limits and dividing by the sum of all of your balances. However, individual accounts weigh just as heavily as the sum of all of your accounts. The rule of thumb is the 30-50-70 rule. Any time your account balance is over 50% of the credit limit on that particular account, it has a negative affect on your credit scores. Once you go over 70% of the credit limit, it reduces your credit scores even more. Once you %26quot;max-out%26quot; a credit card or, worse yet, go over your limit, the effect is huge. Conversly, it works in the opposite direction as well. Once you bring your balance below 50% of your credit limit, it starts increasing your FICO score. Bringing your balance below 30% of your credit limit raises your scores even more. Another mistake people make is that they think closing or not using a credit card helps them. This couldn%26#039;t be farther from the truth. Closing a credit card that has been paid in full would increase your total debt to credit limit ratios and have a negative effect on your scores. Not using a card in several months would cause that account to be deemed inactive-regardless if the account is still open and thus hurt your scores and overall credit rating. Best rule of thumb is to use a card at least every 3 months and pay the bill once you receive the statement. As far as your looking to obtain a 38% debt to income ratio for the purpose of finding a mortgage-that%26#039;s not necessarily true. Most conforming products, especially with full-documentation loans allow a debt to income ratio of up to 45%. Some lenders allow more in the sub-prime or Alt-A markets. Sounds like you need to find a mortgage broker that knows his/her industry to guide you through this. The first thing I do when a client approaches me to help them finance a home is to go over all of these things, helping them to have a solid understanding of exactly where they stand and what they qualify for.

Credit question: Income to Debt ratio?

Debt to income ratios are figured on a monthly basis using you gross income not your net.

If you are taking home $3,000.00 you should be making about $4,000.00 a month gross. divide your total debt that shows on your credit bureau by $4,000.00 and that is your current debt to income ratio.

Credit question: Income to Debt ratio?

Simply put.....example only......$50,000 of debt on your credit report. When you fill out your credit apps, you say you make $30,000, you are over extended with debt, right?

Or Your car is $500, rent $1500, utility $500, student loan $500, child support $300, insurance $200 and minus taxes, your over extended again. DTI - debt to income, what you bring in versus what you shell out each month, simple.

Credit question: Income to Debt ratio?

How debt to income works is the total amount of credit that you have extended to you which in this case would be $43K ($35K+$4.5K+$3.5K) Your reported income which is $36K($3K x 12). As you can see with the total amount that you have in credit far exceeds what you make. What will tell the story is what kind of debt comprises the $43K. Is it all installment credit (fixed amount) or revolving credit (minimum payment)? From what you%26#039;ve said, it looks like a pretty god mix of credit, now the hard part on trying to get your score where you need it.

Paying down the credit cards will help. It will help quite a bit because revolving debt is always harder to pay down becuase there%26#039;s no set amounts that can be computed: One month you%26#039;ve maxed out the cards and turn around and pay them off the next.

With the loan from HSBC and the student loans, those are considered installment loans which no matter what will pretty much be the same unless you pay a little more for it to go to the principal. It probably wouldn%26#039;t be a bad idea to try to pay a little extra if possible to bring down the Citibank and HSBC loans, since they%26#039;re the next 2 smallest loans that you have.

If you%26#039;re considering a mortgage, you may want to check out this website, http://prbc.com/consumers/how/mortgage.p...

It%26#039;s a new credit bureau that allows non traditional payments such as rent, utilities, cellular, etc. that doesn%26#039;t show on regular credit reports to be reported as %26quot;alternative credit%26quot; and can help in building credit, enchancing scores to help obtain a mortgage by showing payment history, which comprises up 35% of your score. If you pay on time, for everything, you will want to sign up for this. I%26#039;ve supplied a lot of links to the website which will explain it far better than I ever could. This could actually be the difference maker when it comes time to shop for motgages

Good Luck!