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Your debt-to-income ratio (DTI) is a number that shows how much of your income is already going toward debt, and it's one of the key things lenders look at when deciding whether to approve you for credit.
But even if you're not applying for a loan, understanding your DTI can help you see how much financial pressure you're really under.
💡 What Is Debt-to-Income Ratio?
Debt-to-income ratio (DTI) is the percentage of your gross monthly income that goes toward monthly debt payments.
This includes:
- Credit card minimums
- Car loans
- Student loans
- Personal loans
- Any other recurring monthly debt
It doesn’t include things like rent, utilities, or groceries.
🧮 How to Calculate Your DTI
Step 1: Add up your monthly debt payments
(Only the required payments, not the full balances.)
Step 2: Divide that number by your gross monthly income (before taxes).
Step 3: Multiply by 100 to get a percentage.
Example:
- $500 credit card minimum payments
- $400 car loan
- $300 student loan
- Total debt payments: $1,200
- Gross income: $3,000/month
➡️ DTI = 1,200 ÷ 3,000 = 0.40 or 40%
⚠️ Why DTI Matters
Lenders use your DTI to figure out how easily you could take on another loan or line of credit. A high DTI signals you might be overextended, even if your credit score looks okay.
Most banks and lenders want to see:
- 36% or lower = great
- 37–49% = borderline
- 50%+ = high risk
But even if you’re not applying for new credit, knowing your DTI can show you whether your current debt load is sustainable.
🔧 How to Lower Your DTI
If your DTI is high, here are a few ways to bring it down:
- Focus on paying down balances with the highest minimum payments
- Avoid taking on new debt
- Increase your income if possible (side work, tax refunds, etc.)
- Use debt relief options to reduce your monthly obligations
How Relief Helps:
At Relief, we help users request savings on overdue debt, which can lower your overall balance and reduce your monthly payments. That means:
- A lower DTI
- Less financial stress
- And more room to breathe in your budget
⚠️ Disclaimer: Relief does not provide financial advice. The information in this article is for educational purposes only and should not be considered a substitute for professional financial guidance. Please consult a certified financial planner or advisor for personalized support.
Links to external websites are provided for convenience and informational purposes only. Relief is not affiliated with these third-party sites and does not endorse or guarantee the accuracy of their content.
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