debt/income ratio, compared to late payments?

Guest 0.10 Dollars($)

Hello, I have about $8000 in debt. I pay my payments on time but have been unable to lower my debt. Life keeps happening. I have a bankruptcy 5 years ago. chapter 7. So I can't get a bank loan to consolidate debt.
My ultimate goal is to pay off debt & buy a house. My credit is good except for bankruptcy. Don't know number.
A credit solutions company told me that the debt to income ratio is much more important than the late or no payments. If I took a radical approach to paying off my debt. Say 10 credit cards. In 1 year I would have 4 paid off with no late payments & 6 bills would have 6 - 12 months no payments. But then would be settled & paid off by the end of year.
If I did this would I be able to get a mortgage or am I totally insane? Please help, I desperately want to get rid of my debt so that I may purchase a house. Any suggestions. Could this possibly work?

Guest 0.10 Dollars($)

You got some really bad advice. Late paymets are very detrimental to your credit score which has a great influence on whether you are approved for a mortgage, and the interest rate. You dont want late payments, check out an FHA loan they are more forgiving for the debt to income ratio.

larry · Joined: 27 Jun 2007 Posts: 3328 473.40 Dollars($)

Hi sheilasvw,

Welcome to the forum,

I do agree with the above poster. Late payments are very crucial and impotent factor when you go to obtain a mortgage. You have already filed Bk. So how can your credit score be good? When you file BK generally your credit score drops almost 300 points and BK appears on your credit report for 7 to 10 years.

You don't know your credit score. So I would suggest you to get one ASAP. It will help you to understand whether you will gat mortgage now or not.

Feel free to ask if you have any further questions.

Best of luck,
Larry

michelle · Posted: Fri Jan 04, 2008 4:04 pm Post subject:

Welcome to the forum sheilasvw,

I have to agree with Larry and Jon, paying off some bills while letting others get behind is really not a good idea. Below I am listing some information obtained at myfico.com on how your FICO score is derived - maybe that will assist you in deciding how you would like to proceed. Please let us know if you have further questions we can answer.
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lisascherzer · Joined: 04 Jan 2008 Posts: 749 0.10 Dollars($)

Late payments are definately worse than debt to income ratio. Make sure you make at least the minimum payments. Sometimes it's easier to work on paying extra on one credit card until it is paid off and then move on to the next one, while still making minimum payments on the others of course. Also, do not close the credit card accounts even when they are paid off. That will lower your credit score.

gmakerley · Posted: Fri Jan 25, 2008 12:03 pm Post subject:

your plan is to be paid in full on everything within 12 months, is it not?
i think that is a worthy and well-thought-out plan, and i also think you ought to stick with it.

if all this debt is collections and charge offs, then it won't make much difference the order in which they are paid, other than do the larger ones as early as possible. if some of it is current debt, such as credit cards, etc. then you must maintain a good payment history on that current stuff while you also make a dent in the old collections/charge offs.

doing all this will enable you to be debt-free as you desire, and will certainly work wonders on your credit score.

larry suggested getting your scores - i usually oppose that advice. however, it wouldnt hurt you (JUST THIS ONCE!!) to do so...paying the $30 or so to get all 3 scores. just be sure you don't sign up for any silly "monitoring" services or anything like that. knowing your score now cannot hurt you, and i would hope it may motivate you to work even harder to boost the scores.

based on what you have stated as your plan, in a year or so you ought to be ready to make the purchase you are trying to make.

please feel free to update us as you move along with this, as your testimony can be helpful to countless others.

livinginnky · Posted: Sun Jan 27, 2008 12:51 pm Post subject:

Let me guess.... they wanted a percentage of the paid off amounts?

And I agree... it was more than likely bad advice.

I recommend based on the minimal information available to pay off the smallest and highest interest rate loans first. But definitely pay ALL of them on time.

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