Kimbery Credit Counselings Blog
Tuesday, June 27, 2006
Debt To Income Ratio
How do you calculate your debt to income ratio? It is simple: Take your monthly fixed expenses and divide that by your gross monthly income (before taxes and deductions). The percentage should be greater than 36%, your credit score will be negatively affected because you are considered to have too much debt. This means credit card companies and banks will likely turn down your application if your debt to income ratio is too high. Each lender sets its own policy. Some might only approve your loan if you have a ratio below 30%, while others will accept a higher one. But in general the rule is to keep your debt to income ratio below 36% if you want to get financing.
Free Debt consolidation quote
To calculate your score, you need to add up your monthly fixed expenses. Monthly fixed expenses include all debt, such as the following: house payment or lease, credit card and other revolving credit balances; car payments, alimony, child support, etc. Do not include grocery, telephone, and utility bills or any debt that will be paid off in the next few months. If your car loan will be paid off two or three months from now, don't include it in the equation.
Here is a sample calculation:
Gross monthly household income: $5,000
Fixed expenses: $1,700
Debt-to-income ratio calculation:
$1700/$5000 = 34%
The above shows that this persons debt to income ratio is 34%. They need to start paying down his debt rather than accumulating more. Unfortunately, he can probably still get approved for another credit card provided he has a good record of paying his bills on time.
If you find yourself in a debt trouble you can help yourself by filling out our free debt application. Credit Counseling Application
Archives
12/07/2003 - 12/14/2003 12/14/2003 - 12/21/2003 12/21/2003 - 12/28/2003 12/28/2003 - 01/04/2004 01/04/2004 - 01/11/2004 01/11/2004 - 01/18/2004 01/18/2004 - 01/25/2004 01/25/2004 - 02/01/2004 02/01/2004 - 02/08/2004 02/08/2004 - 02/15/2004 02/15/2004 - 02/22/2004 02/22/2004 - 02/29/2004 02/29/2004 - 03/07/2004 03/21/2004 - 03/28/2004 03/28/2004 - 04/04/2004 04/11/2004 - 04/18/2004 04/18/2004 - 04/25/2004 04/25/2004 - 05/02/2004 05/02/2004 - 05/09/2004 05/16/2004 - 05/23/2004 05/23/2004 - 05/30/2004 05/30/2004 - 06/06/2004 06/06/2004 - 06/13/2004 06/20/2004 - 06/27/2004 06/27/2004 - 07/04/2004 08/01/2004 - 08/08/2004 09/11/2005 - 09/18/2005 12/18/2005 - 12/25/2005 01/01/2006 - 01/08/2006 01/08/2006 - 01/15/2006 01/29/2006 - 02/05/2006 02/19/2006 - 02/26/2006 03/05/2006 - 03/12/2006 04/09/2006 - 04/16/2006 04/23/2006 - 04/30/2006 05/07/2006 - 05/14/2006 05/14/2006 - 05/21/2006 05/21/2006 - 05/28/2006 05/28/2006 - 06/04/2006 06/04/2006 - 06/11/2006 06/18/2006 - 06/25/2006 06/25/2006 - 07/02/2006 07/02/2006 - 07/09/2006 07/09/2006 - 07/16/2006 07/16/2006 - 07/23/2006 07/23/2006 - 07/30/2006 07/30/2006 - 08/06/2006 08/06/2006 - 08/13/2006 08/13/2006 - 08/20/2006 08/20/2006 - 08/27/2006 08/27/2006 - 09/03/2006 09/03/2006 - 09/10/2006 09/10/2006 - 09/17/2006 09/17/2006 - 09/24/2006 09/24/2006 - 10/01/2006 10/01/2006 - 10/08/2006 10/08/2006 - 10/15/2006 10/15/2006 - 10/22/2006 10/22/2006 - 10/29/2006 11/05/2006 - 11/12/2006 12/10/2006 - 12/17/2006 12/31/2006 - 01/07/2007 03/04/2007 - 03/11/2007 03/25/2007 - 04/01/2007 05/20/2007 - 05/27/2007 07/29/2007 - 08/05/2007 09/23/2007 - 09/30/2007 10/21/2007 - 10/28/2007 11/04/2007 - 11/11/2007 11/25/2007 - 12/02/2007 12/09/2007 - 12/16/2007 12/30/2007 - 01/06/2008 01/27/2008 - 02/03/2008 02/10/2008 - 02/17/2008 03/16/2008 - 03/23/2008
12/07/2003 - 12/14/2003 12/14/2003 - 12/21/2003 12/21/2003 - 12/28/2003 12/28/2003 - 01/04/2004 01/04/2004 - 01/11/2004 01/11/2004 - 01/18/2004 01/18/2004 - 01/25/2004 01/25/2004 - 02/01/2004 02/01/2004 - 02/08/2004 02/08/2004 - 02/15/2004 02/15/2004 - 02/22/2004 02/22/2004 - 02/29/2004 02/29/2004 - 03/07/2004 03/21/2004 - 03/28/2004 03/28/2004 - 04/04/2004 04/11/2004 - 04/18/2004 04/18/2004 - 04/25/2004 04/25/2004 - 05/02/2004 05/02/2004 - 05/09/2004 05/16/2004 - 05/23/2004 05/23/2004 - 05/30/2004 05/30/2004 - 06/06/2004 06/06/2004 - 06/13/2004 06/20/2004 - 06/27/2004 06/27/2004 - 07/04/2004 08/01/2004 - 08/08/2004 09/11/2005 - 09/18/2005 12/18/2005 - 12/25/2005 01/01/2006 - 01/08/2006 01/08/2006 - 01/15/2006 01/29/2006 - 02/05/2006 02/19/2006 - 02/26/2006 03/05/2006 - 03/12/2006 04/09/2006 - 04/16/2006 04/23/2006 - 04/30/2006 05/07/2006 - 05/14/2006 05/14/2006 - 05/21/2006 05/21/2006 - 05/28/2006 05/28/2006 - 06/04/2006 06/04/2006 - 06/11/2006 06/18/2006 - 06/25/2006 06/25/2006 - 07/02/2006 07/02/2006 - 07/09/2006 07/09/2006 - 07/16/2006 07/16/2006 - 07/23/2006 07/23/2006 - 07/30/2006 07/30/2006 - 08/06/2006 08/06/2006 - 08/13/2006 08/13/2006 - 08/20/2006 08/20/2006 - 08/27/2006 08/27/2006 - 09/03/2006 09/03/2006 - 09/10/2006 09/10/2006 - 09/17/2006 09/17/2006 - 09/24/2006 09/24/2006 - 10/01/2006 10/01/2006 - 10/08/2006 10/08/2006 - 10/15/2006 10/15/2006 - 10/22/2006 10/22/2006 - 10/29/2006 11/05/2006 - 11/12/2006 12/10/2006 - 12/17/2006 12/31/2006 - 01/07/2007 03/04/2007 - 03/11/2007 03/25/2007 - 04/01/2007 05/20/2007 - 05/27/2007 07/29/2007 - 08/05/2007 09/23/2007 - 09/30/2007 10/21/2007 - 10/28/2007 11/04/2007 - 11/11/2007 11/25/2007 - 12/02/2007 12/09/2007 - 12/16/2007 12/30/2007 - 01/06/2008 01/27/2008 - 02/03/2008 02/10/2008 - 02/17/2008 03/16/2008 - 03/23/2008
