What do mortgage underwriters do
I think they might of meant credit utilization, instead of dti
Hoping so, because credt card utilization is not a factor in dti calculation that I've ever heard of.
I don't agree with the OP wanting to close cards, prior to applying for a mortgage though.
I would think it would be more beneficial to your score to leave them alone and not have a reported balance, but use each card once every few months to be sure they are not closed by the creditor. And leaving one card that reports something below 10% total revolving credit utilization to maximize the score. I would personally take it lower than thought being reported.
Although I did see a thread on here recently about min payments being reported on cards that have had a zero reported balance to the cra's, which would factor into dti. I checked out my reports and from what I can tell, the cards I have that report a min payment are cards that have a reported balance on. I have one card that I don't use for anything other than a 7.99 netflix auto payment on. My report shows a min payment of 7.99. On that subject, a reported balance doesn't mean you're not paying off at the end of every month. Statement cut dates and
the balance on those dates play into it. If I pay the 7.99 on the card that I was speaking of prior to the cut date, the min payment on that card is reported as 0. The cra's say "min payment" in different ways on the reports. Perhaps in an automated scoring algorithm, it doesn't matter. Who knows.
That is my take from the past few months of reading these boards. If someone in the mortgage industry has another suggestions, I would love to hear them. I am also going to be in the market for a mortgage in the next couple of years. I think that those involved in granting a mortgage loan have a lot of knowledge on the reports that they pull. It was stated in another thread by a lender that his company doesn't see some things that a consumer report would typically show. I believe it was monthly statement balances in comparison to what was paid on a credit card during that month from any of the three cra's. It was also said that paying down credit card debt would not decrease dti. If that is the case, it's absurd. Paying off credit card debt should decrease dti.
They are all using an automated system to make a determination, with the exception of lenders who still do manual underwriting.Source: ficoforums.myfico.com