DTI

DTI is debt to income ratio. When a lender considers a credit application, the most important things are typically credit score, income, and DTI, not necessarily in that order. When it comes to mortgages, they don’t want the mortgage to be more than 35% of DTI typically. There are exceptions and some lenders will go higher, but they’re only going to go to so high. Reports up to 50% by Creditmaestro . Likewise with car loans, conservative lenders don’t like to go over 15%, but some lenders hit 20%, & some don’t care. So if you’re gonna figure your debt to income ratio, you need to know what constitutes income & debt. More importantly, you need to know how to change what you can. Income is self-explanatory, but should be gross monthly, just like debts should be formatted monthly. So, what constitutes debt? Anything and everything on your credit report (CR), but ONLY what’s on your CR. So you can reduce your DTI by reducing the monthly debt on your credit report. For instance, if you have 10 credit cards with a balance, the minimum payments across all of them count toward monthly obligations. If instead it was all on one credit card, you would have only one minimum monthly payment, reducing your monthly obligations and therefore lowering your DTI! The other way is to increase your income. Check with your lender to see if they allow household income, so you can include aggregate gross income. Once you optimize those, it’s simply your monthly debt obligation divided by your monthly gross income. So if you get that under 65%, they’ll have the 35% they’re looking for. But you can ask what their max is, could be 40% or 50%. Plus some government programs set different percentages. So there you go, that will help your DTI. But guess what? that’s not all. Lowering the debt & number of accounts with a balance will also increase your fico mortgage scores. Also important to note: income and DTI are not fico scoring factors. I’ll let everyone fill in more, but thought this would be a necessary article for those newer to credit. © 2022, MFBirdman7. All rights reserved by Birdman [CreditRebels.net](https://www.creditrebels.net)