Summarize the following:
In most instances, creditors and lenders want to see a debt-to-income ratio of 36 percent or less. If your debt-to-income ratio is higher than this percentage, you might have difficulty securing a loan until after that percentage drops.  A ratio of 19 percent or less is ideal, and if you can secure this level of financial security, you should have very little problem securing loans or taking on new credit. A ratio between 20 and 36 percent or less will usually be deemed healthy enough to secure a loan from most lenders, but you should begin cutting back once you . If your debt-to-income ratio is between 37 and 42 percent, you are in a state of minor financial crisis and may not be able to get any loans or new lines of credit. At a ratio between 43 and 49 percent, you will likely begin seeing financial difficulties in your everyday life in the near future. If your ratio is 50 percent or higher, you need to seek professional help to quickly reduce your debt. These are terms that are used when you are looking to secure a mortgage loan. Front-end debt ratios only use proposed monthly housing expenses, while back-end debt ratios use all existing debt and any new projected monthly mortgage payments.  For most purposes, you should look at your back-end debt. Many lenders will usually look at front-end debt, but as a borrower, you should look at both front-end and back-end debt to determine how much you can actually afford regarding new loans and credit. Front-end debt-to-income ratios are also known as housing-expense-to-income ratios. This percentage should be at or below 28 percent, while a back-end debt-to-income ratio should be at or below 36 percent. If your debt-to-income ratio is higher than you would like it to be, you can help lower it by implementing lifestyle changes that decrease your debt levels.  Increase the amount of money you pay toward your debts. If you can manage it, make extra payments toward your loan, house, car, or any other debt for which there is a principle you must pay off in addition to interest. Make sure that the payment goes toward your principle. This will lower your overall debt faster. Do not take on more debt. Put away the plastic and avoid making more purchases on your credit card. Do not apply for any other loans or lines of credit, either. Avoid making any large purchases. If you do not have much savings built up right now, wait until you do. This will allow you to make a larger down payment, and as a result, less of your purchase will be funded with credit and you can reduce the amount of debt you accumulate. Whether your debt-to-income ratio is healthy or not, monitoring it continually can help you avoid major credit problems. You should keep an eye on it even if you do not plan to make a major investment any time soon.  If you know that your debt-to-income ratio is on the high end, keep tabs on it every month. Otherwise, checking the ratio once or twice a year should suffice. Having too much debt can lower your credit score, causing your lending limits to decrease and your interest rates to increase. Monitoring this ratio can help you make better decisions about buying on credit and taking loans out. It can also make the benefits of making more than your minimum credit card payments more evident and allow you to avoid major credit or financial problems in the future. If your debt-to-income ratio rises too high, you could have difficulty making major purchases and you might lose out on the lowest interest rates and best credit terms.
Know how your ratio looks to lenders. Understand the difference between front-end and back-end debt. Take steps to lower your debt-to-income ratio, if necessary. Monitor your debt-to-income ratio periodically.