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Author Topic: Credit history vs. lower debt?  (Read 327 times)
daimowrench
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« on: February 21, 2010, 04:33:55 PM »

I want to take out a mortgage in about a year, but have little credit history. I have good credit, but no high amount loans.

I will be buying a new car soon and was wondering if it would be better to:

a.) Take out an auto loan so that after a year I'd have some credit history (a 15,000 loan or thereabouts, which I've been approved for) OR

b.) Pay cash for the car so that when I do apply for a mortgage next year I will have no debt, but little credit history with larger loans.

Thanks!
heidrek
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« Reply #1 on: March 03, 2010, 03:39:24 PM »

you can check out this article on the  basics of mortgage lending criteria if you like, it covers a bit of what you're asking about.

There's also a good discussion about this topic here.

Equity, Debt/Income ratio and CS are the three pillars of mortgage lending and you ideally need a decent situation in all three.  the same goes for Refinancing.
« Last Edit: March 03, 2010, 03:51:50 PM by heidrek »

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