What is your debt to credit ratio?

Question

I just did my credit report online, and my debt to credit ratio is 83%. I know what debt to income ratio is but when i googled it it told me that debt to credit is how much of your credit you have used up. Now i went back to my credit report and saw that my mortgage is 94%, my installment is 88% but my revolving is only 7%. On further look i saw that installment is just my car paymetn, and revolving is all my credit cards. I was under the impression that only credit cards were calculated in your debt to credit ratio. So when a lender looks at that am i being punished for my mortgage and my car payment? I mean 7% of my credit cards is pretty d**n good. At least i thought it was. My debt to income ratio is only 36% and last i checked that was good too. I'm so confused when it comes to this stuff. I'm wanting a private student loan and now i'm worried i won't get it. I have never missed a payment ever, everything paid on time and in good standing.

Answer 1

Yeah, debt to credit is how much outstanding debt you have compared to how much available credit you have.  If you have $8000 on a card with a $10,000 limit, you have an 80% ratio.

If you only have 7% used, then you're doing great.  Ideally you want it as low as possible, but at least under 20-30%.  Auto and mortgage loan payments are calculated differently because it's not a revolving line (ie, a credit card or a line of credit- something you can borrow from anytime).  Instead it is calculated as debt to income ratio- what your monthly payment is vs. what you make per month.

Creditors love to see you have under 10% debt to income on all non-mortgage payments, and under 30-35% on mortgage payments, but as long as you're under 41% total debt to income, you're doing great.  Yes, you can go higher, but this is ideal.  People have to live and pay taxes too.

Sounds like you're in a great financial position, and you should have no problem getting a student loan.  I have much higher ratios but pay everything on time also- no missed payments.  I had no trouble at all getting any student loan I wanted.

Answer 2

I believe it is the amount of credit used against the amount of credit given.