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     | Wednesday, April 12, 2000 - 07:29 am  If I close my credit card account, and there is still a balance on it, would the balance be included as part of my 'DEBT TO INCOME' ratios? And how is my closing the account with a balance, viewed by creditors? Say, I close my account with a ZERO balance, would this closed account that has a zero balance be included in my DEBT TO INCOME ratio when applying for a mortgage? How does each scenario listed above reflect in one's fico score? I will be applying for a mortgage in about 3 months and I want to be as sure as I can, that I have all my ducks in a row. Any responses on this issue,would be greatly appreciated...
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| | Wednesday, April 12, 2000 - 08:52 am Debt to Income Ratio: Whatever you owe you owe, it makes no difference whether the account is open or closed. Obviously, adding ZERO will not change the ratio. There are varying methods to calculate the monthly payments, some lenders use minimum payments as listed on the credit report, others use a percentage. The ratios can sometimes be manipulated by moving and/or consolidating balances. Consult with your broker/lender NOW because it can take several months for the data on the reports to be updated by the creditors. Credit Scores: Unless you have a LOT of credit available, your Score will most likely go down after you close accounts. I just did a KEYWORD SEARCH for "credit scores" and found 35 *pages* with links on this forum. I hope you've reviewed your credit reports already. If not, I strongly recommend you find a broker who'll give you copies of your reports with all 3 credit scores.
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| | Wednesday, April 12, 2000 - 05:26 pm Thanks for the reply Christine. so are you saying that my macy's account that I closed 5 years ago with a zero balance, that the lender/broker will compute this info into my debt to income ratio? So any credit card account, opened or closed, no matter how long ago, with or without a balance, would be computed when determining debt to income ratios? I just want to understand this correctly. Because, if this is true..I am in trouble..... and the second part about it lowering fico scores if closing w/zero balance, I currently have 5 credit cards with high balances..if I paid them all off, I would have about $7000.00 in available credit..is this too much? Again...thank you
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| | Friday, April 14, 2000 - 12:35 am If your debt is zero, it's zero. A zero balance plus 0+0+0+0+0 is still 0. Obviously, adding zero won't change your debt. You'll probably find it easier to understand if you do the calculations. Get your pen and paper, and you'll see how it works. And $7k is definitely NOT too much available credit. Try to pay your balances down and go for credit line increases.
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| | Saturday, April 28, 2001 - 10:42 am I am awaiting mortgage approval on a VA No/No After submitting the paperwork, I received $4500 that I was not expecting. I have 3 credit cards,all maxed out -totalling $7600.(3300 + 1800 + 2500) I checked my FICO score on line with Equifax and it is 630.(Not real strong) I would like to pay off at least two of the cards(1800 + 2500). However the interest rate on the 3300 is 19% and I'd like to get that monkey off my back. What would look best to the Mortgage company, Pay off 2 cards (1800 + 2500) or pay off one (3300) and some of the other 2? (The 2500 balance is with the same bank who is handling the mortgage)
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| | Sunday, April 29, 2001 - 02:54 pm Why did you have to check your Beacon score after applying for the mortgage? Didn't the lender give you your report and scores? And it really makes no difference at all what you pay off/down and what your score will be after you lower the credit card balances, I assume they already ran the credit since you're waiting for approval. Only if you get declined would it matter. Ask your BROKER what he thinks you should do with your cash. Maybe it's more important to have reserves, etc. In general, I'd pay one card off, and 2 cards down, so they aren't maxed out.
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| | Monday, April 30, 2001 - 11:35 am Thanks for the info. I did contact the person who is handling our loan. She said that she felt it wouldn't matter what we paid off, because our debt to income ratio was 42%(?) and everything looked OK. She recommended paying off the $3300 and saving the rest until we close in case there are some unexpected things we may have to pay for. (The contract states that seller agrees to pay a sum not to exceed $2300 toward in closing costs to include homeowners insurance and prepays). According to our Realtor this should cover the closing costs or be within $200. This home is in GA , selling price 73K. The only the thing that the bank sent me about our credit report was some pages showing I had 2 - 30 day late payments on 2 accounts 4 years ago. I paid off both these accounts 3 years ago. I had to explain why these payment were late. I got the Experian FICO score before we applied for the mortgage (out of curosity) but the bank has never provided the score. If I am declined the mortgage do they give specific reasons and will I have the opportunity to correct any factors leading to decline?
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| | Friday, May 04, 2001 - 12:21 pm If you are declined, you should get the reasons. I'd say you might just the same pay your credit cards down, because you can always use them again if you run short on cash. Of course you don't want to take out expensive cash advances.
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