Lower monthly payments or lower credit utilization?

Lower monthly payments or lower credit utilization?Lower monthly payments or lower credit utilization?
Edwardkig asked 4 years ago

Looking for advice on timing of loans to get a mortgage.  Factors: Fair to Low credit score.  High credit utilization.  We have a plan in place to lower our credit utilization and raise our credit score over the next year to year and a half so we can start seriously house shopping.  I have a vehicle lease which is due to end in December of 2016 which will land smack dab in the middle of that ‘no loan zone’ of 6 months before applying for mortgages.  This is a lease, not a finance so I have to return the car or buy it.  I will be in a situation where I either need to pay off 8k (for a car which I hate by the way), take up another lease or finance, or go without a vehicle.  Going without a vehicle is not really an option here in NH. 

Should I look at getting a new lease NOW?  I read that lenders look heavily at your monthly payments, the lower they are the better-regardless of the total debt owed on the loan.  I could potentially get 9k for a trade, only have to roll over about 5k onto a new loan and still manage to cut my monthly payments down by maybe 100$ . 

But I also read that having a new loan increases your credit utilization as you have only made a handful of payments on a rather large loan by the time they look at your credit.

Which is better?

On a similar note, would my husband be better off keeping his car (4 more years left on the loan) to show low credit utilization or getting a new car with a lower monthly payment?

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