Debt-To-Income Ratio - DTI

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DEFINITION of 'Debt-To-Income Ratio - DTI'

A personal finance measure that compares an individual's debt payments to the income he or she generates. This measure is important in the lending industry as it gives lenders an idea of how likely it is that the borrower will repay the loan.

INVESTOPEDIA EXPLAINS 'Debt-To-Income Ratio - DTI'

The higher this ratio, the more burden there is on the individual to make payments on his or her debts. If the ratio is too high, the individual will have a hard time accessing other forms of financing.

Not sure if your DTI is where it should be? Check out What's considered to be a good debt-to-income ratio?

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