Calculating Your Debt To Income Ratio

July 31, 2008

There are many factors that lenders consider when deciding whether or not to extend credit to someone applying for a loan. Credit score, down payment, and the purpose of the loan are all factors. There is one factor that is looked at probably more closely than any other though, and that is the debt to income ratio. This is the way that a lender determines how likely a consumer is to be able to make timely payments for the life of the loan. Understanding how the debt to income ratio is determined is the key to making sure that you’re in a position to obtain credit in the future.

When you sit down in front of a creditor, you will most likely be asked a series of questions. The lender is looking for the elements in your financial life that comprise your debt to income ratio.

Written by William · Filed Under Debt, Personal Finance | Leave a Comment