Most importantly, you can avoid “creeping indebtedness†by staying aware of your debt-to-income ratio. Knowing your debt-to-income ratio will help you make sound decisions about making purchases on credit or taking out loans. Keeping your debt-to-income ratio under 20 percent will help you avoid major credit problems.
Because it is such a powerful indicator, lenders look at your debt-to-income ratio when they consider extending credit. Letting your debt-to-income ratio rise will jeopardize your chance of making major purchases, such as a car or a home, when you desire. Also, if your ratio is high, you will find it difficult to get additional credit in case of emergencies. As a bonus, if you keep your debt-to-income ratio low, you will more likely qualify for the lowest interest rates and best terms when you apply for credit.
RSS
Most importantly, you can avoid “creeping indebtedness†by staying aware of your debt-to-income ratio. Knowing your debt-to-income ratio will help you make sound decisions about making purchases on credit or taking out loans. Keeping your debt-to-income ratio under 20 percent will help you avoid major credit problems.
Because it is such a powerful indicator, lenders look at your debt-to-income ratio when they consider extending credit. Letting your debt-to-income ratio rise will jeopardize your chance of making major purchases, such as a car or a home, when you desire. Also, if your ratio is high, you will find it difficult to get additional credit in case of emergencies. As a bonus, if you keep your debt-to-income ratio low, you will more likely qualify for the lowest interest rates and best terms when you apply for credit.