Definition
The Debt-to-Income (DTI) Ratio compares an individual's or business�s monthly debt payments to their gross income, indicating financial leverage. DTI = (Gross�Monthly�Income/Total�Monthly�Debt�Payments)�100
Related Services
Personal finance planning, mortgage consulting, and credit risk assessment services help individuals and businesses manage their DTI ratio.
Problem and Application
A high DTI ratio can make it difficult to qualify for loans or credit lines. Lenders prefer a lower DTI ratio as it indicates lower credit risk.
Conclusion
Maintaining a low DTI ratio enhances financial stability and borrowing capacity. Individuals and businesses should manage debt levels relative to income.
