You’ve probably heard it a thousand times—your credit score matters. But here’s the part most people miss: your debt to income ratio credit score connection matters even more than you think. If you’ve got a decent credit score but can’t get approved for anything, it’s probably not the score—it’s your ratio. And if the words “debt to income” make your brain want to tap out, don’t worry. I’m gonna make it make sense, plain and simple.
Why Debt to Income Ratio Slaps Harder Than You’d Expect
This is the moment when people go, “Wait… I always thought my credit score was everything.” Yeah, it’s huge. But it’s not working solo. Your debt to income ratio (DTI for short) can absolutely crush your credit dreams like an empty Doritos bag.
So, here’s what lenders are really snooping for: Can you actually afford another payment? Not just “are you paying your bills,” but “after all that, do you have room left for more debt without face-planting?” That’s where DTI comes in.
If your DTI is too high, you could have an 800 credit score and still get a firm “nah” from a lender. Most mortgage lenders, for example, want your DTI under 43%, but ideally under 36%. Personal loan companies? They peek at it too. Every. Single. Time.
How to Actually Calculate Your Debt to Income Ratio
DTI’s not magic—it’s just a math formula wearing a scary mask. Here’s how it goes:
- Add up all your monthly debt payments (credit cards, car loans, mortgage, student loans, etc.)
- Divide that number by your gross monthly income (what you make before taxes)
- Multiply the result by 100 to get the percentage
Say you pay $2,200 in debts each month, and your gross income is $5,000. Your DTI is 44%. Boom. Higher than most lenders want. Now you see why your score might not be the thing holding you back.
Wait, So Does High DTI Lower My Credit Score?
Here’s where folks get tripped up. Your DTI ratio isn’t a credit score factor directly. But just because it’s not part of the score algorithm doesn’t mean it’s harmless. Let me break that down.
DTI affects your ability to get approved for new credit. If you can’t get new credit, you can’t diversify your credit mix. If you’re forced to keep using the same cards and your balances creep up, boom—your credit utilization goes up, and that slices your score.
I helped a single mom named Tanya clean up her credit. She thought paying her cards on time was enough. It wasn’t. Once she started tackling her $700/month car payment and student loans, her DTI dropped, her approvals skyrocketed, and her score followed. It’s a chain reaction, y’all.
Credit Score vs. Debt to Income Ratio Credit Score — What’s More Important?
Ah, the classic “which matters more?” debate. Truth is, they’re two sides of the same rusty coin. Your credit score opens doors, but your DTI keeps them from slamming shut.
And here’s a bit of an “aha” moment for you: I’ve seen people with lower credit scores get approved because their DTI was squeaky clean. Meanwhile, someone with a shiny 750 score and $3K/month in obligations could barely secure a grocery store rewards card.
If I had to choose which one to focus on first, I’d say fix your DTI. If you’re drowning in minimum payments, your score won’t save you. Getting approved when you’re broke is like getting accepted to Harvard when you can’t afford books. What’s the point?
Does Paying Off Debt Help Both?
Yes, and it’s beautiful when it happens. Paying off debt reduces your DTI and typically boosts your credit, especially if you knock down revolving balances (like credit cards). I always tell folks: Don’t close your credit cards, though. That’ll just shrink your available credit and hurt your score. Let ‘em breathe.
What If My DTI’s Too High and I’m Drowning?
Breathe. You probably need a reality check, not a judgment parade.
First step? Track your spending for a month. Use an app. Use a notepad. Use sticky notes on your forehead—I don’t care, as long as it’s real. Most budgets fail because they’re wish lists, not reality checks.
And if after looking at your spending and debts you realize you’re in over your head, it’s time to look at options. And no, that doesn’t mean blindly signing up with the first debt relief company you see on Facebook.
Read The Ultimate Consumer Guide to Checking Out a Debt Relief Company Before You Sign On the Line before you hand over your info. Please.
What About Credit Counseling?
I’m not totally anti-counseling—but most folks don’t know the full story. Agencies run Debt Management Plans (DMPs), which are structured repayment plans. But they’re not magic.
Completion rates for credit counseling aren’t great. Most people drop out before finishing, and the time, effort, and monthly payments can drag on for years.
Not to mention, one study showed it could cost you $400,000 in lost wealth compared to other routes. So, if you’re not sure it’s worth it—trust that gut feeling.
Bankruptcy: The F-Word That’s Actually a Lifeboat
Look, I know people flinch at the word. But here’s the truth: those who file bankruptcy often do better in the long run than those who drag the chains for years.
Do You Have a Question You'd Like Help With? Contact Debt Coach Damon Day. Click here to reach Damon.
If your DTI is wrecked beyond repair and you’re missing bills left and right, bankruptcy might be your cleanest way up. It clears the deck. Don’t let shame steer the wheel. This is your financial reboot, not a character flaw.
Apps and Habits That Can Help Shrink That DTI
When you’re trying to fix your debt to income ratio credit score situation, tools can help. Here are a few I actually recommend:
- Credit Karma — decent for checking your score and getting an idea of what lenders see
- Mint or You Need a Budget (YNAB) — to help you track habits, not force new ones overnight
- Acorns or Betterment — help build some savings quietly in the background while you clear debt
Financial change doesn’t require a spreadsheet from hell. It just needs honest numbers and a better plan.
FAQ: Common Questions About DTI and Credit
What’s a Good Debt to Income Ratio?
Under 36% is usually considered healthy. For mortgages, 43% is often the max. Lower is better, but balance it with quality-of-life spending too. Don’t starve yourself for a number.
Can I Get a Loan With High DTI?
Sometimes! But it depends on the type of loan and your score. You’ll typically face high interest rates, smaller approval limits, or outright denials. It’s not impossible—but it’s a steep hill.
Does Rent Count Toward DTI?
Kind of. Rent isn’t included in your DTI for most credit applications, but lenders still look at your full picture. If 70% of your income goes to rent and debt, that’s still risky in their eyes.
Quick Pep Talk If You’ve Read This Far
If you’re still here, you’re doing the brave thing—facing the truth. Props to you. I’ve watched people climb out of massive debt pits by just taking one honest look at what they owe and deciding enough was enough.
