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What is a Debt-to-Income Ratio

The percentage of your gross monthly income (what you earn before taxes) that goes towards paying off debts. Debts can include car payments, credit card bills, child support payments, and student loans. When figuring out how much money you can afford to borrow, your lender will factor in the total percentage of your income that you pay toward debt every month. This number is called your debt-to-income ratio (DTI) and it affects your credit rating.