Checking your financial vital signs

Just like physical health, financial health is vitally important. From your net worth to your credit score, you might already be keeping tabs on your financial well-being. But do you know your debt-to-income ratio?

The debt-to-income ratio often is used by lenders to determine your ability to repay a loan. To calculate your ratio, take all your monthly debt payments – things like your rent or house payment, credit card payments, and other loans (but not expenses like groceries, utilities and taxes) – and divide them by your monthly gross income (before your taxes and other deductions are taken out).

Mortgage loan studies show that the higher a borrower’s debt-to-income ratio, the more likely they are to have difficulty making their monthly payments. If your ratio is less than 35%, you’re in good shape. If your ratio is higher than 35%, lenders might ask for additional eligibility criteria before lending you money. Consider paying off other debts to ensure you qualify for your next loan.

If you’re in the market for a Personal Loan, Auto Loan, or Mortgage Loan, we have loan options to help you out!


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