Cancelling credit card question

**strictlye** · 10-17-2011, 04:00 PM

Originally Posted by rideitlikeyoustoleit

More tips please! Haha

What do you want to know? Bare in mind, how the bank views your beacon score is not the same as how the bureau views their score.

Originally Posted by crankcall

help out those of us with no industry smarts, what is a TDSR/GDSR and a beacon score?

The Total Debt Service Ratio (TDSR) is the percentage of the customer’s gross annual income required to cover all payments associated with housing plus all other debts and obligations, such as loans and credit card payments.
Generally, a customer’s TDSR should be below 40% to qualify for personal credit.

TDSR = Total Debt (monthly housing + loans + credit cards) / Total Income (all qualifying income) x 100

The Gross Debt Service Ratio (GDSR) calculates the percentage of the customer’s gross monthly income required to cover all payments associated with housing. These payments may include mortgage payments, interest, property taxes, and may sometimes include secondary financing, heating, or condominium fees.
Generally, a customer’s GDSR should be below 32% to qualify for personal credit.

GDSR = (Monthly Mortgage Payment + Interest + Housing Costs) ÷ Monthly Gross Income X 100

**LiNK666** · 10-17-2011, 04:03 PM

I wonder how they calculate how much to lend out for a mortgage...

**Yamaha_Gurl** · 10-17-2011, 04:04 PM

What is the highest score someone can get? I hear mixed things.

**strictlye** · 10-17-2011, 06:47 PM

Originally Posted by LiNK666

I wonder how they calculate how much to lend out for a mortgage...

Look at the formula above. Traditionally your TDSR should be around 40% and GDSR around 32%. So when you work you mortgage payment into your tdsr/gdsr you have to meet the threshold. Thus the least about of outside monthly debt you have, the more you can qualify for. This is why lenders tell you to cancel cards that you don't use. BUT you also have to have a minimum beacon to qualify So reducing the balance will allow them to lend you more without effecting your beacon.

We lend out depending on what you can afford monthly.

**rideitlikeyoustoleit** · 10-18-2011, 02:07 AM

Originally Posted by strictlye

Look at the formula above. Traditionally your TDSR should be around 40% and GDSR around 32%. So when you work you mortgage payment into your tdsr/gdsr you have to meet the threshold. Thus the least about of outside monthly debt you have, the more you can qualify for. This is why lenders tell you to cancel cards that you don't use. BUT you also have to have a minimum beacon to qualify So reducing the balance will allow them to lend you more without effecting your beacon.

We lend out depending on what you can afford monthly.

Isn't it your mortgage shouldn't be more than 30% of your monthly income or something like that?

**strictlye** · 10-18-2011, 07:30 AM

Thats the GDSR figure, its 32%. Its saying that your housing expense shouldnt be more than 32% of your income and your total debts shouldn't exceed 40% of our income which is the TDSR figure.

**crankcall** · 10-18-2011, 07:49 AM

Thanks Strictlye,
I see these numbers and hear the names bantered about but haven't put the effort into learning what they are or how they can effect life with regard to credit borrowing. You've provided some of the best advice this place has put up in a while.

**CruisnGrrl** · 10-18-2011, 11:04 AM

problem with the sears card is you may have to pay a fee on it yearly.

**LiNK666** · 10-18-2011, 11:09 AM

Pretty sure I don't have to pay a fee. If I did I wouldn't have gotten the card.

**jeero** · 10-20-2011, 08:01 AM

Great information in this thread.
I knew it was better to keep some type of balance on the card to show good management, but now I've learned more about my credit card and it looks like I will have it for a long time, lol.