Is it better to pay down high balance on credit cards or pay off car payment prior to mortgage app?
I need to reduce my debt toincome ratio, the sum of my credit card payments is less than my installment account, so I thought that would be better for freeing up cash. However, I noticed that after I ran upmy balance recently for christmas, my credit score actually dropped some. So with my tax refund I can pay off a car payment that will be normally paid off in March 2007 or pay down the credit card balance, which would be better for mortgage application? mrtopproducer, if you are around I would be interested in hearing your thoughts?
Public Comments
- Any debt that is eliminated before applying for a mortgage is a plus. It is also beneficial to pay on time, so that late payments are not put on your credit rating. Talk to a realtor that offers full service for first time buyers. They know a lot of things and will pre-qualify you. At that point talk to your loan agent and see how you can clean up and improve your credit report.
- I would think that it is better for you to pay down your credit card balance since it is a revolving balance, whereas the loan is a set amount. The lower your balance compared to your credit card limit the higher your credit score.
