Your debt to income ratio is what makes the difference between paying your bills every month or falling behind and into financial disaster. Basically speaking, if you pay out nearly as much (or more) in monthly costs as you bring in your debt to income ratio is probably too high. As a business owner it is important to pay attention to debt to income ratio because it could have a significant impact if it gets out of control.
1. You may not be eligible for the financing you need when you need it if you have a high debt to income ratio. One of the ways many people have fallen into an unfavorable position is through credit cards. Not managing credit cards probably and accepting every offer that comes your way will make your debt to income ratio increase faster than you'd ever …show more content…
When a debt to income ratio is too high it will usually be reflected in your credit score. While credit score is not everything for business owners it is still important. Credit scores are tied into the rates that you will be offered and if you qualify for conventional financing. Conventional financing usually has the most favorable rates and terms. The higher the risk the higher the payment. The higher the payment the higher the debt. It is easy to see why you are best to just avoid getting yourself into a situation with an out of control debt ratio.
4. It is easier to control your finances. When you have less debt you are less likely to forget to pay a bill or fall a little short of cash at the end of the month. Very few people enjoy paying bills and it is never any fun. When you have to pay them while worrying about having enough money to do so that makes bill paying downright miserable.
5. When you need financing the approval process will be much quicker. Debt to income is one of the first factors a creditor looks at when making a decision to lend to you. Drawn out approval processes can often be time consuming, deflating, and negative if you don't get approved when all is said and
1. You may not be eligible for the financing you need when you need it if you have a high debt to income ratio. One of the ways many people have fallen into an unfavorable position is through credit cards. Not managing credit cards probably and accepting every offer that comes your way will make your debt to income ratio increase faster than you'd ever …show more content…
When a debt to income ratio is too high it will usually be reflected in your credit score. While credit score is not everything for business owners it is still important. Credit scores are tied into the rates that you will be offered and if you qualify for conventional financing. Conventional financing usually has the most favorable rates and terms. The higher the risk the higher the payment. The higher the payment the higher the debt. It is easy to see why you are best to just avoid getting yourself into a situation with an out of control debt ratio.
4. It is easier to control your finances. When you have less debt you are less likely to forget to pay a bill or fall a little short of cash at the end of the month. Very few people enjoy paying bills and it is never any fun. When you have to pay them while worrying about having enough money to do so that makes bill paying downright miserable.
5. When you need financing the approval process will be much quicker. Debt to income is one of the first factors a creditor looks at when making a decision to lend to you. Drawn out approval processes can often be time consuming, deflating, and negative if you don't get approved when all is said and