Credit Questions for Lenders

[Morgan Madill]

It is more desirable to a lender to see a credit line paired off in full quickly or to credit lines paid off on time over a stretch of time?

I have student and auto loans and I believe if I paid them off as quickly as possible it could actually hurt my lend-ability due to the mix of credit lines going down to multiple credit cards I pay off every month.

I intend to purchase my first deal this year. Would it be better to have my car and student loans paid off (about 10k combined) or to have a savings of 10k to show as reserves on the student and car loan?

What is the sweet spot between not having as many bills which hurts buying power, or having a lower credit score because a person is debt free having paid off said lines of credit?

This question is directed towards lenders!

Thanks BP!

[Chris Mason]

Originally posted by @Morgan Madill:

It is more desirable to a lender to see a credit line paired off in full quickly or to credit lines paid off on time over a stretch of time?

I have student and auto loans and I believe if I paid them off as quickly as possible it could actually hurt my lend-ability due to the mix of credit lines going down to multiple credit cards I pay off every month.

I intend to purchase my first deal this year. Would it be better to have my car and student loans paid off (about 10k combined) or to have a savings of 10k to show as reserves on the student and car loan?

What is the sweet spot between not having as many bills which hurts buying power, or having a lower credit score because a person is debt free having paid off said lines of credit?

This question is directed towards lenders!

Thanks BP!

 These are questions for your loan officer.

If your DTI is tight, pay off the debt to lower DTI.

If your liquid assets are tight, keep the debt, you need the money for your down payment. 

If your DTI *and* liquid assets are tight, whelp, that's where it gets fun and nuanced. :)