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Old 01-28-2012, 09:45 AM
 
Location: Durm
7,104 posts, read 10,869,936 times
Reputation: 8043

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I'm curious about how all of this works in terms of the timing - I'm not totally thrilled to find that my utilization is at 30% exactly (according to MyFico). I did some googling and I guess the threshold for lenders is 30% or less, but MyFico tells me it negatively affected my score (which they said was "great!").

I'd wanted to have my credit card either totally paid off before my lease is up or nearly paid off - I might see if I can extend the lease in for a short term - but how much would a 30% utilization rate affect a first time mortgage app, esp an FHA loan?

Also, say I paid off 25-30% of my existing credit card balance next month - which I do intend to do - would my utilization significantly lower? The utilization takes into account student loans too, right? (I'll have one of those for a very long time).

I'm not all that concerned about meeting housing expenses when I buy knowing that I'm buying small and very low - I'm definitely not one of these people who would get in over my head. I've extended my time as a renter several times to beef up savings a bit first and pay down other debts.(I say this because last time I asked about mortgages I was flamed from here to China for some reason)
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Old 01-30-2012, 10:16 PM
 
346 posts, read 502,409 times
Reputation: 700
Mortgage lenders aren't really going concerned much about your utilization if your DTI is in line with their requirements. A higher utilization can adversely affect a credit score and will have more of a detrimental effect if you don't have a longer credit history, variety of types of credit/tradelines, etc. to balance it out.

Our utilization is currently at 56% but we have an excellent credit score so we had absolutely no problem qualifying for a 5% down conventional mortgage recently so your "the threshold for lenders is 30% or less" statement is patently false. If you want factual information on what lenders will look at go to the myfico site and visit the mortgage forum in the community section (far right hand tab at the top of the home page) or the mortgage board at the forums at creditboards.com. You'll find all sorts of educational posts, many from lending professionals with the credential and experiences to back up the info they give out and they are always happy to answer questions.
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Old 01-31-2012, 09:09 AM
 
Location: Durm
7,104 posts, read 10,869,936 times
Reputation: 8043
Ah, very helpful, thank you!
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Old 01-31-2012, 09:15 AM
 
Location: Richardson, TX
12,164 posts, read 20,147,057 times
Reputation: 32859
Quote:
Originally Posted by NorasMom View Post
I'm curious about how all of this works in terms of the timing - I'm not totally thrilled to find that my utilization is at 30% exactly (according to MyFico). I did some googling and I guess the threshold for lenders is 30% or less, but MyFico tells me it negatively affected my score (which they said was "great!").

I'd wanted to have my credit card either totally paid off before my lease is up or nearly paid off - I might see if I can extend the lease in for a short term - but how much would a 30% utilization rate affect a first time mortgage app, esp an FHA loan?
All credit scores come with a list of key factors that lowered your score -- even if your score is 850 it would show factors such as credit utilization percentage or "too many inquiries in last 12 months." Keeping your debt ratio 30% and under on a certain card is good for your credit score but has nothing to do with your mortgage eligibility directly.
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