How Healthy
Is Your Debt?

Not all debt is bad.

Check on the health of your debt and learn how it impacts your financial health.

healthydebt

Take the quiz: See how your financial health isn’t just your credit score

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Get to know the relationship between debt and income

For most of us, having debt is a part of our lives. Debt often means that you’re making progress toward achieving your goals like: owning a home, getting that diploma, or purchasing a car. The hope is that debt is manageable, and you can feel comfortable month-to-month. But the reality is that when debt payments start to creep up, it’s easy to feel overwhelmed. Debt stress is real.

Your debt-to-income (DTI) ratio expresses that feeling of debt stress into a percentage. DTI calculates how much of your monthly income goes toward debt payments.

Why should you care about debt-to-income (DTI) ratio?

P.S. DTI is especially important if you’re in the market for new credit

  • DTI helps to demonstrate how much financial stress a person may be feeling.
  • Lenders will use your DTI to help determine your ability to take on new debt.

Just so you know: Best Egg offers personal loans for debt consolidation, credit card refinancing, and for things like home improvement, vacation and adoption. We use DTI as a factor in helping us determine if you qualify for a loan with us.

How do you feel about your debt right now?

Help us learn more about how people navigate debt in their daily lives.

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See how your debt stacks up.

What is considered a good DTI varies from lender to lender. However, the Consumer Financial Protections Bureau (CFPB) provides this rule of thumb:

  • If you have a mortgage: up to 43%
  • If you do not have a mortgage: up to 34%
  • If you have a mortgage: up to 43%
  • If you do not have a mortgage: up to 34%

Wherever your debt-to-income ratio stacks up, remember that DTI is just one component that makes up a larger financial picture. Just like your credit score. And your savings ratio. Or any other metric that is used to measure personal financial health.

Banks and lenders have determined over millions of transactions that DTI ratios within the above thresholds matter—and in situations when you’re applying for new credit—it often does matter.

Here’s the bottom line:

Your credit score doesn’t always show your full financial picture. When you understand more about your debt, you can keep track of your financial health, and make better financial decisions.

Ready to adjust your monthly payments?

If you think your debt payments are too high, consider consolidating debt and credit cards with a Best Egg personal loans. You can refinance high-interest debt, lower your monthly payments and could improve your DTI health over time.

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Won’t affect your credit score!