Ah, so this is what your maths teachers meant when they said you\u2019d use it when you were older.<\/p>\n\n\n\n
When it comes to managing money, knowing your numbers matters. One of the most important is your debt-to-income ratio. It\u2019s an easy way to understand how much of your income is going towards debt each month. And lenders often use it to assess how well you\u2019re managing.<\/p>\n\n\n\n
Here\u2019s how it works, why it matters and how to keep it in check.<\/p>\n\n\n\n
Your debt-to-income ratio (or DTI) does what it says on the tin. It\u2019s a figure that shows how much of your monthly income goes on paying debts. It\u2019s a good indicator of your financial health, and it\u2019s one of the things lenders look at when deciding if you can take on more credit.<\/p>\n\n\n\n
A high DTI might make it harder to get approved for loans or credit cards. A lower one suggests you\u2019re in a stronger position to manage repayments.<\/p>\n\n\n\n
It\u2019s actually much easier than the secondary school flashbacks suggest. Here\u2019s the formula:<\/p>\n\n\n\n
Monthly debt payments \u00f7 gross monthly income \u00d7 100 = DTI percentage<\/strong><\/p>\n\n\n\n Step-by-step example:<\/strong><\/p>\n\n\n\n Let\u2019s say you earn \u00a32500 each month before tax, and you pay:<\/p>\n\n\n\n That\u2019s \u00a3950 total debt payments.<\/p>\n\n\n\n Now divide \u00a3950 by \u00a32500:<\/p>\n\n\n\n \u00a3950 \u00f7 \u00a32500 = 0.38<\/strong><\/p>\n\n\n\n Multiply by 100 to get your percentage:<\/p>\n\n\n\n 0.38 \u00d7 100 = 38% DTI<\/strong><\/p>\n\n\n\n <\/p>\n\n\n\n If your DTI is on the high side, the goal is to reduce your monthly debt payments or increase your income. Here are some practical ways to start:<\/p>\n\n\n\n This is the one you have most control over. Look at where your money\u2019s going and spot areas to cut back. Small savings can add up over time. Any subscriptions kicking about that you could absolutely live without?<\/p>\n\n\n\n Hold off on borrowing more until your DTI is at a more manageable level.<\/p>\n\n\n\n This might not be easy short term, but even an extra shift here and there can help bring your ratio down over time.<\/p>\n\n\n\n If you qualify, switching to a loan with better terms can reduce your monthly payments.<\/p>\n\n\n\n Pay over 6 weeks<\/strong><\/a>: split your purchase into four payments with zero interest \u2013 fees may apply. That means no sudden spikes in monthly debt, and no hidden costs. Pay now<\/strong><\/a>, earn up to 5% back in Zilch <\/strong>Rewards<\/strong><\/a>: Each time you use Zilch to Pay now, you earn up to 5% back in Rewards. Those necessary spends become investments into your future \u2013 you can put those Rewards towards your next purchase. Smarter spending<\/strong>: by using Zilch for essential short-term costs and paying them off in full, you avoid adding to your DTI with high-interest credit card balances. Used responsibly, Zilch helps you stay in control, all while keeping your debt-to-income ratio in check.<\/p>\n","protected":false},"excerpt":{"rendered":" Ah, so this is what your maths teachers meant when they said you\u2019d use it when you were older. When it comes to managing money, knowing your numbers matters. One of the most important is your debt-to-income ratio. It\u2019s an easy way to understand how much of your income is going towards debt each month. […]<\/p>\n","protected":false},"author":18,"featured_media":16836,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"inline_featured_image":false,"footnotes":""},"categories":[13],"tags":[],"class_list":["post-16835","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-blog"],"acf":[],"_links":{"self":[{"href":"https:\/\/www.zilch.com\/uk\/wp-json\/wp\/v2\/posts\/16835","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.zilch.com\/uk\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.zilch.com\/uk\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.zilch.com\/uk\/wp-json\/wp\/v2\/users\/18"}],"replies":[{"embeddable":true,"href":"https:\/\/www.zilch.com\/uk\/wp-json\/wp\/v2\/comments?post=16835"}],"version-history":[{"count":0,"href":"https:\/\/www.zilch.com\/uk\/wp-json\/wp\/v2\/posts\/16835\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.zilch.com\/uk\/wp-json\/wp\/v2\/media\/16836"}],"wp:attachment":[{"href":"https:\/\/www.zilch.com\/uk\/wp-json\/wp\/v2\/media?parent=16835"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.zilch.com\/uk\/wp-json\/wp\/v2\/categories?post=16835"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.zilch.com\/uk\/wp-json\/wp\/v2\/tags?post=16835"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}\n
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<\/li>\n<\/ul>\n\n\n\nSo, what\u2019s a good debt-to-income ratio?<\/strong><\/h2>\n\n\n\n
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<\/li>\n<\/ul>\n\n\n\nHow to fix your debt-to-income ratio<\/strong><\/h2>\n\n\n\n
Review your budget<\/strong><\/h3>\n\n\n\n
Avoid taking on new debt<\/strong><\/h3>\n\n\n\n
Boost your income<\/strong><\/h3>\n\n\n\n
Consider refinancing<\/strong><\/h3>\n\n\n\n
How Zilch can help<\/strong><\/h2>\n\n\n\n
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