Debt to income ratio too low

Mr.Saver

On the MSE Credit Club Affordability score area, it says:

We’ve listed your debt ratio as ‘fair’. This is when you have less than 1% of the income you’ve told us you have as debt, or ...

Because my landlord only accepts bank transfer or cash, I can't use a credit card to pay the rent. My monthly expenditure excluding the rent is a lot lower than 1% of my annual income.


The only two obvious solutions seem to be:
1, Spend more money
2, Give up a portion of my income


But I really don't like any of them. Is there any other way that I can fix this debt to income ratio issue?

Paully28

Why do you want your debt to income ratio to be higher, that's not a good thing you know. Unless I am missing something?

[Deleted User]

Mr.Saver wrote: »

Is there any other way that I can fix this debt to income ratio issue?

If you think it's an issue, you'll need to spend less and eliminate any debts. But you're not going to get it much lower than 1%.

What debts do you have?

Mr.Saver

Paully28 wrote: »

Why do you want your debt to income ratio to be higher, that's not a good thing you know. Unless I am missing something?

Because this:

Debt to income ratio


This amber rating could be for one of two reasons – your debts are either quite high compared with your income, or 'too low'. If you have quite high debts compared with your annual income, ...
If this doesn’t sound like you, then this amber status may be because you have little or no credit. Bizarrely, this can put lenders off, because if you don’t have any credit, they don’t have a reliable indicator of whether you handle it well. Without this, you may be declined – even if you’re able to easily repay.

I'm in the second situation - my debt to income ratio is too low, and "this can put lenders off".

Mr.Saver

Deleted_User wrote: »

If you think it's an issue, you'll need to spend less and eliminate any debts. But you're not going to get it much lower than 1%.

What debts do you have?

In fact, I'm trying to get it higher.

To answer your question, I only have a couple of hundred pounds monthly spending on two credit cards, which I repay in full each month.

[Deleted User]

Ignore any scores or ratings the CRA’s give you.

Are you actually trying to achieve something here to achieve a goal financially - again ignoring what the CRA’s advise you?

SnowTiger

Mr.Saver wrote: »

Because this:

Debt to income ratio


This amber rating could be for one of two reasons – your debts are either quite high compared with your income, or 'too low'. If you have quite high debts compared with your annual income, ...
If this doesn’t sound like you, then this amber status may be because you have little or no credit. Bizarrely, this can put lenders off, because if you don’t have any credit, they don’t have a reliable indicator of whether you handle it well. Without this, you may be declined – even if you’re able to easily repay.

I'm in the second situation - my debt to income ratio is too low, and "this can put lenders off".

I won't worry about it if I were you.

What you quoted is only someone's opinion.

One simple way to increase your debt would be to get a 0% money transfer credit card. Then make a balance transfer to an interest paying account and only pay the minimum off every month.

Another option would be LOQBOX. It basically records regular savings as a loan on your credit files.

[Deleted User]

Mr.Saver wrote: »

Because this:

Debt to income ratio


This amber rating could be for one of two reasons – your debts are either quite high compared with your income, or 'too low'. If you have quite high debts compared with your annual income, ...
If this doesn’t sound like you, then this amber status may be because you have little or no credit. Bizarrely, this can put lenders off, because if you don’t have any credit, they don’t have a reliable indicator of whether you handle it well. Without this, you may be declined – even if you’re able to easily repay.

I'm in the second situation - my debt to income ratio is too low, and "this can put lenders off".

You've confused debt with credit.

Lenders want to see you have experience of handling credit. Not that you can get yourself into debt.

Mr.Saver

!!! wrote: »

Ignore any scores or ratings the CRA’s give you.

Are you actually trying to achieve something here to achieve a goal financially - again ignoring what the CRA’s advise you?

I'm an expat in the UK who has a "thin file". I'm trying to build my credit file, and get one (or a few) 0% spending or cash back credit card in the short term. I've checked my credit card eligibility, and I have very small chance to get any attractive credit cards. I'm also trying to build my credit file for the long run. In a few years of time, I might need a mortgage or something big.

Mr.Saver

SnowTiger wrote: »

I won't worry about it if I were you.

What you quoted is only someone's opinion.

One simple way to increase your debt would be to get a 0% money transfer credit card. Then make a balance transfer to an interest paying account and only pay the minimum off every month.

Another option would be LOQBOX. It basically records regular savings as a loan on your credit files.

Most 0% money transfer credit cards charge a fee, and I can't (0% chance) get any no fee cards because I have thin credit file. So this isn't an option for me.

The LOQBOX idea is interesting, assuming I use it for £500 per month instead of paying the same amount into a 5% regular saver (well, most likely split into two 5% regular saver accounts with £250 each, but this doesn't matter), then I'd lost £161.29 interest over a year according to the MSE regular saver calculator. This is still cheaper than a 0% interest but 3% fee money transfer credit card for the same £6,000 debt over a year. I'll definitely consider LOQBOX if I can't find anything else interesting.

Mr.Saver

Deleted_User wrote: »

You've confused debt with credit.

Lenders want to see you have experience of handling credit. Not that you can get yourself into debt.

How do leaders know that I can handle credit without having any debt?

I'm trying to get myself into the cheapest (ideally free) debt I can find, only to build my credit file.