In regards to credit score is it better to have a "in good standing debt" or lower debt to

After checking my credit reports for my wife and myself, I found an almost maxxed out $5000.00 credit card account on both that actually belongs to my mother. The payments have all been made on time so it shows in good standing but is that less important then having a better debt to income ratio?

In regards to credit score is it better to have a %26quot;in good standing debt%26quot; or lower debt to income ratio?

Its favorable to have a lower debt to income ratio. Future and present creditors reflect on how much debt you have and are you managing it well. Reaching your credit limit or maxing it out shows a weakness and decreases your FICA score.

In regards to credit score is it better to have a %26quot;in good standing debt%26quot; or lower debt to income ratio?

A revolving account with a balance 80% or less of the limit will reflect better than a maxed out credit card. A maxed out card will not reflect negatively on your score, but a card with some available balance will lead to a higher score.

Debt to Income ratio is one of four things that underwriters look at when doing a loan. DTI= (All monthly payments)/(Monthly Income). Higher DTI levels are allowed with higher credit scores. Your income is not reported to credit bureaus so DTI ratio never affects credit score.

In regards to credit score is it better to have a %26quot;in good standing debt%26quot; or lower debt to income ratio?

DTI is key really. although you have made your payments on time and will eventually pay off the card, since it%26#039;s near maxed out it actually is affecting your credit negatively. once your balance on any given card exceeds 50% of the total limit, it sends a red flag to the reporting bureau(s) that you might be in trouble since your balance is increasing. this drops your score incrementally for however long you are over that 50% threshold. maxed out or near maxed out cards do not look good to creditors or whoever is checking your credit. it shows them that you are either getting stretched too thin, or that you mismanage your credit. ideally, you want to have these cards in good standing WITH relatively low balances. this makes whoever is checking your credit assume that you are not a credit monger and that you can manage your funds competantly. so if you can, drop the balance on them to below 50% and you should be fine. keep making on time payments and your score will increase pretty significantly in about 3-5 months.

In regards to credit score is it better to have a %26quot;in good standing debt%26quot; or lower debt to income ratio?

As a mortgage lender, I think you are using %26quot;debt to income%26quot; incorrectly. You probably mean debt to credit limit ratio, which should be kept below 48% of the credit limit (or below 73% as a first step) for best credit score on that account--and this is true of all cards except Cap One and Providian and some MBNA%26#039;s.

you might like www.LearnAboutCredit.com, which is one of my sites