05-11-2013 05:06 PM
Can you let me know what is the best debt to income percentage and what all goes into the debt column? Do the lenders figure an amount for such monthly expenses as gasoline, food, utilities, phone service and other non-exact monthly expenditures or is it a combination of mortgage/rent, revolving and installment accounts?
05-11-2013 08:29 PM
My mortgage lender took my gross income and divided into that ALL reported minimum payments (as show on the CRs) and added to that anything self-admitted like non-reporting loans or payment arrangements (e.g. my rent). All of that was expressed as a percentage. Other expenses like utilities, cell, school tuition, gas, food, etc. were excluded along with any charge cards that required me to PIF (like my Amex).
05-11-2013 11:18 PM
36% or less is the healthiest debt load for the majority of people. Avoid incurring more debt to maintain a good ratio.
37%-42% isn't a bad place to be. If your ratio falls in this range, you should start reducing your debts.
43%-49% is a ratio that indicates likely financial trouble. Start paying your debts now to prevent an overloaded debt situation.
50% or more is a dangerous ratio. You should be aggressively paying off your debts. Don't hesitate to seek professional help.
I took those ranges from an article I was reading a few weeks ago about calculating DTI. As for calculating your DTI, it was explained pretty well above me.
05-12-2013 10:13 PM
05-13-2013 11:59 AM
So they only base it on reported minimum payments (credit cards and loans) along with rent but they don't take other expenses into consideration like utilities, food, clothes ect? Is it always based on that?
Yes - everytime I have had my DTI calculated they took any minimum payments on debts reported on my CR's (mortgage, car loans, student loans, credit cards etc) and used that total plus any self reported items (rent) to calulcated total debt payments.
Forums posts are not provided or commissioned by FICO. Forums posts have not been reviewed, approved or otherwise endorsed by FICO. It is not FICO's responsibility to ensure all posts and/or questions are answered.Advertiser Disclosure: The listings that appear on myFICO are from companies from which myFICO receives compensation, which may impact how and where products appear on myFICO (including, for example, the order in which they appear). myFICO does not review or include all companies or all available products.
IMPORTANT INFORMATION: All FICO® Score products made available on myFICO.com include a FICO® Score 8, along with additional FICO® Score versions. Your lender or insurer may use a different FICO® Score than the versions you receive from myFICO, or another type of credit score altogether. Learn more
FICO, myFICO, Score Watch, The score lenders use, and The Score That Matters are trademarks or registered trademarks of Fair Isaac Corporation. Equifax Credit Report is a trademark of Equifax, Inc. and its affiliated companies. Many factors affect your FICO Score and the interest rates you may receive. Fair Isaac is not a credit repair organization as defined under federal or state law, including the Credit Repair Organizations Act. Fair Isaac does not provide "credit repair" services or advice or assistance regarding "rebuilding" or "improving" your credit record, credit history or credit rating. FTC's website on credit.