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DTI question. How can I improve my DTI ?


jcbuy
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I understand that DTI is total debt/gross income. Where to lenders get the debt information from ? Do they get it only off the credit report ?

 

I pay all my balances in full every month. I dont carry any balance forward. What else can I do to improve DTI ( lower the debt number) - Should I start paying cash instead of using credit cards .? All pros please advise

 

jcbuy

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If you can pay before the statement closing date, a 0 balance will report to the CRAs. This will then reflect the fact that you have 0 debt. You should pay all your cards to 0 before the statement cuts (which is different than the due date), with the exception of 1 card that you leave a $2 balance on - this will maximize your FICO score.

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It sounds like you have very little monthly credit debt (yes they use what is reporting on your credit report)

If your thought is you want to buy as much house as possible you need to know that the max cannot just be housing.

So for example of the dti guidelines say 31/43 that means 31% housing and 43% for housing and credit debt

You can exceed those numbers with an automated approval but you cannot use the max 43% for just housing - I have seen up to about 38% just housing -

if you have a very high income it may allow a little higher -

It is something you wont know for sure until a loan officer runs your file through the automated system -

 

Hope this helps

B

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