 TITLE: How Can You Reduce Your Debt-to-Income Ratio? CONTENT: You can improve your DTI by either reducing your monthly debt payments or increasing your income. Here are a few questions to help get you in the mindset:\n*   **Can you pay off any of your debts?** Are you close to paying off an auto loan, for example? Do you have the cash to pay off one or more of your credit cards? If you can dispose of any debt, you can reduce your monthly debt expenses and quickly lower your DTI.\n*   **Are you accounting for all of your income?** Include all the income you receive when filling out your loan application. Do you make money from a second job or side business? Are you collecting child support or alimony? Do you have any passive income or pensions?\n*   **Can you negotiate a raise, work overtime or land a higher-paying job?** If a raise or promotion is possible in the near future, it might be worth waiting on a loan application.\n*   **Is it possible to reconfigure your debt?** You might be able to lower your monthly credit card payments with a debt consolidation loan.\nAlso consider this: If DTI is preventing you from getting a loan, ask yourself whether this is a good time to take on additional debt. Using more than 43% of your income to service your debt doesn't leave much for food, clothing, taxes or savings—to say nothing of health care, entertainment, travel or other expenses. If you can't reduce your DTI by legitimately raising income or lowering debt, make sure the benefits of any new debt you're contemplating are really worth it.  \nDoes DTI Affect Your Credit?\n----------------------------\nDTI does not affect your credit report or score. That's because income information does not appear on your credit report, so credit reporting agencies can't calculate DTI. DTI also doesn't reflect your credit status: You can have an excellent credit score and a clean credit report and still have a high debt-to-income ratio. In fact, many people do.\nThere is an indirect relationship between DTI and credit utilization. Credit utilization is the percentage of available credit you're using by carrying credit card balances. Higher credit utilization generally lowers your credit score; it's an indicator that you have a lot of debt relative to your debt capacity. If you pay off credit cards to lower your credit utilization and raise your credit score, you will also reduce your monthly debt payments and improve your DTI.  \nPutting Your Best Application Forward\n-------------------------------------\nIf you're planning to apply for credit in the near future, it pays to understand your DTI and do what you can to optimize it. It's also a great time to review your free credit score and report, so when you're ready to present your information to lenders, your profile is one they can happily approve. END