What is an acceptable debt-to-income ratio?
Generally, the lower a debt-to-income ratio is, the better your financial condition. Following are examples of the different percentages. Note: This example assumes a loan applicants FICO score is above 700. 10% or less: Shouldnt have trouble getting loans. May qualify for lower rates. 11% to 20%: Again, shouldnt have trouble getting loans. Time to scale back on spending. 21% to 35%: Although you may not have trouble getting new credit cards, you are spending too much of your monthly income on debt repayment. 36% to 50%: You may still qualify for certain loans, however it will be at higher rates. It is time to develop a plan to get out of debt. More than 50%: Very difficult to qualify for financing. NOTE: All answers are providing the consumers FICO score is above 700. You can avoid creeping indebtedness by staying aware of your debt-to-income ratio. Knowing your debt-to-income ratio will help you to make sound decisions about making purchases on credit or taking out loans. Our goal is
