Olde Hornet
Well-Known Member
Your credit score isn’t the only number that matters for financial health
Your credit score is a bellwether of your financial habits, but it's not the only one.
www.usatoday.com
Your credit score is a bellwether of your financial habits, but it's not the only one. There are other numbers that say a lot about you when you apply for things like a credit card, car loan or mortgage, or act as a yardstick to measure how financially healthy you are.
Here are three numbers worth paying attention to and what you can do to influence them:
Your debt-to-income ratio: This is how your total monthly debt payments compare with your gross monthly income, expressed as a percentage. It’s important to lenders since it shows them whether you can afford to take on more debt. It matters as much as your credit score in lending decisions.
Calculating your DTI ratio helps you see how you look to lenders and understand whether you are carrying too much debt. A ratio of 20% or below is considered financially healthy by financial experts. A ratio that is from 36% to 40% and higher shows financial stress, according to the Federal Reserve and the Certified Financial Planner Board of Standards.