In addition to your credit score, your debt-to-income (DTI) ratio is an important part of your overall financial health. Calculating your DTI will help you determine the percentage of whether applying for credit is the right thing to do.
To lenders the DTI is an important factor for whether you are a good prospect for a loan. For yourself it can be a measure by showing how much of your monthly income is going towards your debts. It can also be a good indicator whether you are ready for a big financial decision in your life, like: buying a home, a new car, making an investments, etc.
Calculating your debt-to-income ratio shows you how much money you owe each month. Monthly bills include: rent, student loan, credit card, child support or other debts. Divide the total by your gross income, before your taxes.
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