Blog

If you've been diligently paying all of your bills every month, maybe you're reading this article while enjoying a congratulatory glass of wine or a piece of chocolate cake. After all, don't you deserve a reward for all that discipline? 

But hold on ... shouldn't your excellent credit score be worth a little more than a booze or sugar hangover?  So why, exactly, is your lender not showing you some love?

If you have a bigger credit card balance than you’d like, you’re in good company. The average US household has a credit card balance of about $16,061.

Combine that with student loans—which approximately 44.2 million Americans have—and the picture becomes clear. You, your neighbors, and most of the people you know are probably swimming in debt. So how can you swim out?

If a limited credit history or a blip on your credit report have been keeping you from borrowing money, a new development for 2019 may change your luck. 

Fair Isaac Corp., which you likely know as FICO, is introducing a new method for scoring credit — the UltraFICO — that could improve your credit score and give you a better chance of getting that loan you've been after. How? UltraFICO considers not just your borrowing history but also your bank transaction history. 

If you have that giddy butterflies-in-the stomach feeling and everything else feels right and natural, there are plenty of things you’ll want to overlook when it comes to love. One of those is a bad credit score.

But if getting engaged or married is in your future, your partner’s credit score will affect your financial future. And so will a lot of other things about their financial life.

If you’ve ever applied for a loan and been denied — despite your good credit score and history of on-time payments — your debt-to-income ratio may be the unseen culprit.

Your debt-to-income ratio is the total of your monthly debts, divided by your gross monthly income. It’s a simple way for lenders to assess your current debt load — and your ability to take on new debt.

This number isn’t the only way lenders decide whether to give you a new loan. But it’s an important one. Borrowers with high debt-to-income ratios are generally considered at increased risk of defaulting, and may be offered higher interest rates and less flexible terms.

Here’s how to determine yours.

See also: Paying Off Student Loans