Your debt ratio shows how your monthly debt compares to your monthly income. A high
debt ratio may be viewed as an indication that you are living beyond your means.
Lenders may refuse to loan additional money to people with high debt ratios because
they are doubtful that the borrower will be able to pay back the loan.
The debt calculator will help you determine the ratio of your monthly debt in relation
to your monthly income. Here are general guidelines to assess your debt ratio.
General Guidelines for Debt Ratio
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0 % - 30%
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Good
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31% - 50%
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High
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|
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51% - 65%
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Approaching Unacceptable
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66% - 75%
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Much Too High
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More than 75%
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Excessive Use of Credit
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When you start to reach the high point, you are already in danger of not being able
to keep current with your payments. This is especially true if you run into unexpected
expenses such as critically needed car or home repairs. When your debt ratio is
high, these unexpected expenses may keep you from paying existing loans and you are
likely to be refused if you try to borrow additional money.