This may sound like a stupid question, but how exactly is your debt ratio figured out. Do you take the balances of all unsecured debt and divide by annual income, or is there some other method? Any input would be appreciated. Thanks.
There are several ratios. For total debt to income, you can take total debt (including secured) divided by income. For unsecured debt to income, do as you said--total debt divided by total income. Then you have usage ratios, which involve balance divided by credit limit to see how much of your available credit you're using. I think there are several of those, depending if it's just revolving or all debt, including things like installment loans.
I know when we bought our home 6 yrs ago they took all our unsecured debt (payments) and divided it by our monthly income. They also took all our debt (including the estimated mortgage payment) and then divided it by our monthly income. Thus 2 different debt ratios.
Hedwig, Is there a calculation concerning total # of accounts open vs their CL? The reason I ask is I have 8 accts IIB, that Equifax persists in showing as open. My Eq score is my lowest. thanks Julie
$4,000 OWED ON ALL CARDS $40,000 TOTAL CREDIT LIMITS ON ALL CARDS YOU ARE AT 10% USED (VERY GOOD)---anything under 20% is good
