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Your credit score plays a major role in your financial health. It affects your ability to get approved for loans, secure favorable interest rates, and even rent an apartment. If your credit isn’t where you’d like it to be, don’t worry—there are practical steps you can take to repair it. With time, consistency, and smart financial habits, you can rebuild your credit and open the door to more opportunities.
At a very basic level, your debt to-income (DTI) ratio is simply your long term, semi-permanent debt compared to your current income. Usually, your mortgage lender will do this as a monthly comparison to make it easy, but the ratio’s the same whether you compare month to month or year to year. Your DTI ratio compares your monthly debt payments to your monthly gross income (before taxes or deductions). It’s a critical factor that lenders use to assess your ability to manage a mortgage alongside other debts.
As a functioning adult, you know there’s something about debt that you’re supposed to understand at this point in your life, right? Something about not having too much, or maybe not too much in relation to something else… but frankly, this stuff is kind of confusing and some days you’d just rather take your Visa, buy a pizza, have a massage and then take a nap.