Debt to Credit Ratio

Debt to Credit Ratio
Debt to Credit Ratio looks at your total current debt compared to your total available debt. This includes all loans that are reporting on your credit report. The lower your DTC ratio, the better, as it appears that you are not at your maximum borrowing capacity, with a bunch of new loans.

Some Examples:
Mortgage: Let’s say you had a $100,000.00 mortgage, and you now owe $20, 000. Your DTC is 20% in this area.
Installment: Let’s say you have two auto loans, each for $25,000, and they are both brand new, you have made no payments yet. Your DTC I this area is 100%

Credit Cards: Let’s say you have a card with an available balance of $25,000, and you have paid it off, but left it open, as we always suggest. Your DTC ratio here is 0%.

Total Debt to Credit Ratio looks like this:
Total Available: $100, 000 mortgage
$50, 000 installment (auto) ======== $175, 000.00
$25000 credit cards

Total Debt: $20, 000 mortgage
$50, 000 installment (auto) ======= $70, 000.00
$0 credit cards
Debt to Credit Ratio is calculated like this: 70, 000/175,000 = .4 multiply by 100 to get a percentage, and your DTC ratio is 40%