Debt to Income Ratio

[Whereis750]

How is your debt to income ratio calculated? Does it affect your Fico score? Do CC issuers consider it when applying?

[Anonymous]

1) Typically, (Monthly Debt Payments / Monthly Income). Usually for mortgages this includes only payments that will last 10 months or longer.

2) Your income has no bearing to your FICO score in any way (that I'm aware of)

3) Most CC approvals will consider your income, but not necessarily your debt to income ratio per se.

[pizzadude]

---

@Anonymous wrote:

1) Typically, (Monthly Debt Payments / Monthly Income). Usually for mortgages this includes only payments that will last 10 months or longer.

2) Your income has no bearing to your FICO score in any way (that I'm aware of)

3) Most CC approvals will consider your income, but not necessarily your debt to income ratio per se.

---

+1.    Income is neither displayed on your credit reports nor factored into FICO scoring.    Creditors definately care about it though....

[Tikon]

There are income-related scoring factors in the FICO calculations, although not income explicitly.

All things the same:

A large mortgage will score better than a medium mortgage when compared to your revolving credit lines.Ditto for auto loan.

There's also a chicken and the egg scenario with credit lines. More income and spending will get you higher credit lines which means you can get better utilization given the same absolute spending for a given month. This is, in effect, an income contingent factor.

[HoldingOntoHope]

---

@Tikon wrote:

There are income-related scoring factors in the FICO calculations, although not income explicitly.

All things the same:

A large mortgage will score better than a medium mortgage when compared to your revolving credit lines.Ditto for auto loan.

There's also a chicken and the egg scenario with credit lines. More income and spending will get you higher credit lines which means you can get better utilization given the same absolute spending for a given month. This is, in effect, an income contingent factor.

---

If you have a source to confirm this information I'm sure several of us would be interested. This is the first time I have ever seen a statement like this presented.

Although it is true that it can be difficult to find a creditor to be the first to jump out and give a large credit line most of what I have seen is credit history related vs income related. There are members who post who have credit lines in excess of their annual income from a single issuer. And I have about one and a half times my annual income from only a few issuers. They didn't start there but they have grown to it. And my creditors have not asked me to verify my income since they asked what it was at the time of application (In some cases several years ago).

I do know I have read of a company which purports to be able to guess your income based on the trade lines in your credit report, but I do not remember their name or have any idea which if any creditors use their services.

[pizzadude]

---

@HoldingOntoHope wrote:

I do know I have read of a company which purports to be able to guess your income based on the trade lines in your credit report, but I do not remember their name or have any idea which if any creditors use their services.

---

There is actually a FICO score model available to creditors that does just that ~ it estimates your income based on what is in your credit reports.

[HoldingOntoHope]

Thanks. I was thinking it was a FICO product but I did not want to misrepresent information that I wasn't sure of. At least not moreso than my old foggy brain does already.