Your debt-to-income (DTI) ratio is the percentage of your income that goes toward paying your debt. It's important not to confuse debt-income ratio with credit utilization which is the amount of debt you have related to your credit limits.
A lot of lenders, especially mortgage and auto lenders, use your debt-to-income ratio to figure out how much a loan you can handle. For example, a mortgage lender will use your debt-to-income ratio to figure out how much mortgage you can afford after all your other monthly debts are paid.
You, too, can calculate your debt-to-income ratio to figure out how much debt you have. Print and use the Debt to Income Ratio Worksheet to help calculate your ratio.
