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The Co-operative Bank posted new mortgage applications of £2.6bn in the first six months of the year, beating the total for the whole of last year.   
The lender’s new home loans came in at £2.3bn in 2023, adding that its mortgage pipeline this year is currently around £1.1bn in a financial statement. 
It put its jump in applications down to improving its mortgage lending criteria, increasing loan-to-value ratios for different products and “optimising repayment strategies for interest-only mortgage products”.   
It also halved the average time to issue a mortgage offer from over 29 days to 15 days, although the firm said it had suffered “mortgage margin pressure”.   
Co-operative Bank chief executive Nick Slape said: “Mortgage new business applications in the first six months of the year were more than double those in the same period last year.”   
However, it reported a pre-tax profit of £24.2m for the first six months of the year, less than half of the £61.8m profit it generated a year ago. 
Major lenders have seen profits cut back this year from sizeable returns seen over the past two years, as the base rate has stabilised and competition in the mortgage and savings market increases.   
In May, Coventry Building Society agreed to buy the Co-operative Bank for £780m in cash.     
The building society said it will integrate the bank “gradually over several years”.    
It added: “During this period, the society and the bank will continue to operate under their current names and branding while the work required to provide more integrated services in the future is carried out.”     

While applying for a loan, lenders consider several factors to ensure that you’re a responsible borrower who can comfortably repay the debt. Lenders will only lend you money when they know you can pay them back, but how do they make sure? That’s where the debt-to-income ratio (DTI) comes in.

It’s a factor that lenders consider to assess your repayment capabilities, and having an understanding of it can be beneficial for your financial situation.

Read on to understand what Debt to Income Ratio is, its importance, and how to calculate it.

What is the Debt-to-Income (DTI) Ratio?

The Debt to Income (DTI) ratio is a financial metric that compares an individual’s monthly debt payments to their gross monthly income. Lenders commonly use it to assess a borrower’s ability to manage monthly payments and repay debts.

A lower DTI ratio indicates a healthier balance between debt and income, suggesting that the borrower is more likely to manage their debt payments effectively.

Conversely, a higher DTI ratio may indicate that the borrower has too much debt relative to their income and may have difficulty managing their obligations. Generally, lenders prefer a DTI ratio of 36% or lower.

Importance of Debt to Income Ratio

The Debt to Income (DTI) ratio is important for several reasons:

Lending Decisions

Lenders use the DTI ratio to evaluate a borrower’s ability to manage monthly payments and repay debts. It is an important factor in the approval process for mortgages, car loans, personal loans, and credit cards.

Interest Rates and Loan Terms

DTI is one of the important factors in deciding the loan terms. Borrowers with lower DTI ratios are usually offered better interest rates and more favorable loan terms because they are perceived as less likely to default on their loans. Conversely, a higher DTI ratio can lead to higher interest rates and less favorable loan terms due to the increased risk to the lender.

Financial Health Indicator

The DTI ratio is a good indicator of an individual’s financial health. It helps individuals understand their debt levels relative to their income and assess when they’re deep in debt.

Budgeting and Planning

By calculating and understanding their DTI ratio, individuals can create more realistic budgets and financial plans. This helps them recognize the portion of their income that goes towards debt repayment and allows them to plan for repaying their debt sooner, which can consequently reduce their debt over time.

Meeting Lender Requirements

Lenders usually prefer a DTI ratio of 36% or lower for various types of loans.

Risk Management

For lenders, the DTI ratio is a risk management tool. It helps them assess the likelihood of loan repayment and reduce the risk of default.

How is the Debt to Income Ratio Calculated?

The Debt-to-Income (DTI) ratio is calculated by dividing an individual’s total monthly debt payments by their gross monthly income and multiplying the result by 100 to get a percentage.

Here’s a step-by-step explanation of how to calculate it:

Step 1: Determine Total Monthly Debt Payments

Include all your recurring monthly debt obligations, such as mortgage or rent payments, car loan payments, student loan payments, credit card payments (usually the minimum payment due), personal loan payments, and any other debt payments.

Step 2: Calculate Gross Monthly Income

Gross monthly income is the total income earned before taxes and deductions. This includes salary or wages, bonuses and commissions, overtime pay (if regular), pension, and any other sources of regular income.

Step 3: Apply the Formula

Use the following formula to calculate the DTI ratio:

Let’s understand the DTI calculation with an example: 

Step 1: Determine Total Monthly Debt Payments

Home Loan EMI: ₹30,000Car Loan EMI: ₹8,000Education Loan EMI: ₹4,000Credit Card Minimum Payment: ₹3,000

Total Monthly Debt Payments = ₹30,000 + ₹8,000 + ₹4,000 + ₹3,000 = ₹45,000

Step 2: Calculate Gross Monthly Income

Salary: ₹1,20,000Bonus: ₹10,000

Gross Monthly Income = ₹1,20,000 + ₹10,000 = ₹1,30,000

Step 3: Calculate DTI Ratio

DTI Ratio ≈ 34.62 %

This percentage indicates that 34.62% of the individual’s gross monthly income is used to cover debt payments, which can help lenders assess their creditworthiness.

What is a Good Debt to Income Ratio?

A good Debt-to-Income (DTI) ratio suggests a manageable level of debt relative to income, indicating financial stability and the ability to handle additional borrowing when necessary.

Here are some general guidelines for what constitutes a good DTI ratio:

Lenders usually prefer a DTI ratio of 36% or lower. You will likely be seen as a low-risk borrower who responsibly manages debt.

While not ideal, many lenders will still consider borrowers with a DTI ratio in this range, especially if other factors (such as a high credit score) are favorable.

Borrowers may still qualify for loans, but the interest rates and terms might not be as favorable as those offered to individuals with lower DTI ratios.

A DTI ratio above 43% is generally considered high and may indicate that the borrower has too much debt. This can make it challenging to secure loans, and if approved, the terms may include higher interest rates.

Borrowers with high DTI ratios may have difficulty managing monthly payments and are at greater risk of defaulting on their loans.

Conclusion

The debt to income ratio is an important metric that plays a significant role in lenders’ creditworthiness assessments and can help individuals determine their financial stability as well. A lower DTI ratio indicates a better balance between debt and income, increasing the likelihood of loan approval and favorable terms.

The DTI ratio is a significant factor when it comes to approvals and deciding terms for personal loans. Lenders use this figure to determine your ability to repay the loan while managing existing obligations. A lower DTI ratio enhances your chances of securing a personal loan with better interest rates and terms.

Frequently Asked Questions

How does the DTI ratio affect loan approval?

A lower DTI ratio increases the likelihood of loan approval and can result in better interest rates and loan terms. Lenders use the DTI ratio to assess the risk of lending to a borrower; a higher ratio suggests greater risk.

Can I improve my DTI ratio?

Yes, you can improve your DTI ratio by increasing your income or reducing your debt. Strategies include paying off high-interest debts, avoiding new debt, and refinancing existing loans to lower monthly payments.

Does the DTI ratio affect all types of loans?

Yes, the DTI ratio is an important factor for various types of loans, including mortgages, car loans, and personal loans. Each type of loan may have different acceptable DTI ratio thresholds, but a lower ratio is generally preferred across loan types.

How often should I check my DTI ratio?

It’s a good idea to check your DTI ratio periodically, especially before applying for a loan. Regular monitoring can help you stay on top of your financial health and make informed decisions about managing debt.

What happens if my DTI ratio is too high?

If your DTI ratio is too high, you may have difficulty securing loans or may receive less favorable terms and higher interest rates. It indicates that you are over-leveraged and may struggle to manage additional debt. You can try to pay off existing debts to maintain your DTI ratio.

Students aren’t the only ones facing a long list of things to do and some fraught emotions when they’re planning for college. It’s not a walk in the park for their parents either.
While your role in college planning and financing is very different from your student’s it’s an important one — and you want to do right by your kid. But there are some common missteps that parents make, especially when it comes to talking about how students should finance their education.
Consider these five areas where other parents have gone astray so you can avoid doing the same.

Mistake #1: Not sharing enough information about your finances and ability to help
When your kid was little, you likely didn’t discuss the family budget beyond occasionally saying a specific toy or trip was too expensive.
But what worked at age 7 doesn’t work at 17. Your kid deserves to know a bit about the family finances, in particular, how much — if any — help you can give them in paying for college.
Now, that doesn’t mean you have to give them the nitty-gritty on each credit card balance and that your annual bonus got slashed during Covid. It’s possible to share too much, and you deserve some privacy as well.
But you do your kid no favors if you have limited ability to help them pay for college but they’re so oblivious about the family budget that they assume you can and will pay their full ride. Let them know early on if you plan to help and if so, in what ways and how much.
Doing so gives them a more realistic picture of what kind of schools they can afford and what financing alternatives (loans, work-study, etc.) they need to consider.
Mistake #2: Not helping them set a budget
Even kids who are good at managing their money will need help coming up with a budget for college. Most likely, they’re living at home now, and responsible for only certain limited expenses, like gas for their car or buying their own clothes.
Budgeting for college — including food, books, rent if they aren’t on campus, and the cost of travel if they go to school some distance away — is a very different ball game. They often also overestimate how much they can work while still maintaining their grades.
Help them come up with a realistic budget now, and you can avoid a lot of heartbreak (for them and you) later.
Mistake #3: Assuming your kid can’t qualify for aid or scholarships
We hear it all the time: Families think they make too much money to qualify for any financial aid, so they don’t pursue it.
The truth is, virtually every family can qualify for some form of financial aid. (The few that don’t generally have enough money that they aren’t worried about this issue in the first place.) It’s always worth applying to see what you can get, so make sure your student fills out the FAFSA.
Even if you don’t qualify for federal financial aid, quite a bit of state- and college-based aid requires you to fill out the FAFSA. Don’t leave money on the table because you think the answer might be no. It could be yes!
The other half of this mistake is thinking that if your kid isn’t a permanent resident of the honor roll that they can’t get scholarships. Nothing could be further from the truth.
There are scholarships with all sorts of varied criteria, including scholarships for those belonging to a certain ethnicity or religion, who are tall, are pursuing a certain career path, or simply filled out a form. (We’ve got our own that you and your kid can both apply for.)
Encourage your child to spend a little time every week looking for and applying for suitable scholarships. An extra $250 here and $500 there can add up to a decent chunk of money to put toward their education. We’ve made the search a little easier. Visit our scholarship hub where you can search by different criteria to find scholarships that apply to your kid.  
Mistake #4: Thinking college admissions and financing haven’t changed
Sharing your knowledge and experience with your kids is a huge benefit. But chances are that if you went to college, it was decades ago. A lot has changed. Your insight still has value, but if your kid says some of your advice is unrealistic or out-of-date, it’s worth looking into it — they just might be right.
Mistake #5: Not being flexible
Established workers are changing how they work in the current “Great Resignation,” and many students are rethinking their educational and career plans as well. You may have had your heart set on your student following in your footsteps attending the same college you graduated from and maybe even taking a specific career path. But that plan might not feel right to your kid anymore or it may be financially unfeasible. And let’s face it: They’ll be the person dealing with student loans for years or decades after they leave school.
There’s more than one way to get an education and prepare for working life. If your kid is thinking about an alternative path such as trying a trade school, community college, or taking a gap year, don’t automatically dismiss it. Hear them out (Why do they want to do this? What’s their plan for how it will work?) and do some research on your own. You may be surprised at some of the benefits.
Your instinct as a parent is to help your child prepare for college as much as you possibly can. But now, when they’re on the cusp of adulthood, your role is changing to one of a trusted advisor.
Understanding that you don’t, and can’t, have all the answers for your child is a big part of your job now. What you can do is make sure you provide them with the best information so they can make their own calls. We have a lot of great info on financial aid,  loans, figuring out how much college will actually cost, and reducing those costs as much as possible, to help you along the way. 
 

It is well known that credit bureau scores do not matter to approve you for an online payday loan. The loans are a simple approach to fast money no matter what your credit history is. No credit, low credit, bad credit, or even good credit. It doesn’t matter when it comes to a payday loan. Your credit bureau score is an important factor with bank and credit union loans. How are your credit bureau scores calculated?
Payday Loan Online Does Not Use Your Credit Bureau Score
Most other financial institutions are concerned with your credit bureau score. Your score might be the only thing that holds you back in acquiring lower-cost money. Do you know what factors measure your credit bureau score?
On-time payments – Creditors set up payment dates and send statements for debtors to pay a minimum amount by a certain date. When you are late, a creditor will report this information to the credit bureaus. Depending on how late, the severity against your credit score will reflect the period. Creditors will send in reports of increments of 30, 60, 90, or 120+ days late on your payment.

If you are reported as 30 days late, it will affect your score when it is “currently” late. Once paid, the report will not hurt your score unless you are often late.
Being late 60 days will also have no long-term effects as long as it is paid. Make sure it does not happen very often. It will have short term effects while it remains unpaid. Creditors will report once a month. Until the latest report is made, your score will be affected and could influence other financial opportunities to your disadvantage.
Reports made against payments that are 90 days late will remain on your credit report for seven years, paid or not. Once you have reported as late for 90 days, creditors will assume that you are a riskier customer. Your credit score will reflect this by dropping in value.
In being 120+ days late, the score does not drop any more than the damage from 90 days late. What makes your score drop more is that loans are usually sold to third party collections or “charged off.” These occurrences will be reported separately from the late report, which will lower your credit score more.

Negative Reporting From Your Creditors, Not Payday Loan Lenders
The number of derogatory marks will affect your credit score. If you are late on a payment, it will affect your score accordingly. Having multiple creditors reporting your late payments negatively will bring additional damage to your credit score. Reporting will count tax liens, repossessions, foreclosures, and settlements.
What is My Debt-to-Income Ratio?
Credit card utilization rate is a measure of how much available credit you are using at any given time. Divide the total amount of available credit by the total amount owed. The answer will be in percentage form. For example, if you have $10,000 available to spend with your total amount of credit and have balances that add up to $5000, your rate is 50%. Your debt to income ratio is figured similarly but with your income divided by debt. Both scores should not be larger than 30% without having negative effects.
Keep Your Credit Options Open
The average age of open credit lines, the total number of accounts, and hard inquiries into your credit history negatively affect your score.
The more creditworthy your credit profile looks, the more you will be approved for financial help. Those without a healthy score will have fewer options and will turn to companies that do not use a credit score to loan money, online payday loans, car title loans, and pawn shops.

Entrepreneurs, in their quest for guidance and resources, often overlook the treasure trove of opportunities offered by the Small Business Administration (SBA). These valuable programs encompass advice, mentoring, access to capital, federal contracting assistance, and various other forms of support. Regrettably, many time-pressed entrepreneurs remain unaware of these programs or fail to explore their full potential.
In a recent article in the the Wall Street Journal, Holly Wade, the Executive Director of the NFIB Research Center at the National Federation of Independent Business, a staunch advocate for small businesses, observes, “It’s often a challenge to find the thing that would be most helpful in a huge universe of information.”
While the utilization of SBA programs has been steadily increasing, with approximately 33.5 million small businesses currently benefitting from them, there remains a continuous drive to reach more enterprises and expand the suite of available programs, according to an SBA spokesperson. The need to raise awareness is paramount.Here, we shed light on several lesser-known SBA programs that could significantly benefit small businesses, as recommended by consultants, government officials, and trade-group executives who regularly collaborate with small enterprises:
1. Small Business Development Centers (SBDCs)
SBA-sponsored SBDCs offer counseling and training to small businesses in various critical areas, including capital procurement, business planning enhancement, financial management, and marketing. Karen Mills, former director of the SBA under President Obama, emphasizes the importance of counseling in identifying a business’s specific needs and providing appropriate financial or other resources. To locate the nearest SBDC, business owners can refer to the SBA website’s “Local Assistance” tab.
2. Score Mentoring Program
Since 1964, Score, a nonprofit organization based in Herndon, Virginia, has assisted over 11 million entrepreneurs in launching, expanding, or exiting their businesses. The organization, partially funded by the SBA, boasts a roster of approximately 10,000 volunteers who offer expert mentoring, resources, and education across the United States and its territories. Score mentors guide various domains, including financing, human resources, and business planning. As Karen Mills says, “This is a perfect place to vet your business plan.” These specialized mentors maintain ongoing communication with small-business clients via email, telephone, and video. The program offers various services, including training, webinars, online workshops, on-demand courses, and other valuable online resources. For more information or to find a local mentor, business owners can visit the SBA’s website under the “Local Assistance” tab or explore score.org.
3. Federal Contracting-Assistance Programs
The federal government strives to allocate at least 23% of all federal contracting dollars annually to small businesses, offering specialized programs to facilitate this objective. In fiscal year 2022, small-business contracting programs resulted in $163 billion in federal contracts for U.S. small businesses, up from $154 billion in the preceding fiscal year, according to the SBA.
Within this framework, the SBA administers programs to support disadvantaged small-business owners who meet specific eligibility criteria. Furthermore, programs specifically cater to women business owners, veterans, and businesses in historically underutilized business zones, known as HUBZones. Remarkably, many business owners must be aware of these beneficial programs.
For instance, the federal government aims to allocate at least 5% of all federal contracting dollars annually to women-owned small businesses. Yet, many women-owned businesses must know they can become certified to compete in this category. To qualify, businesses must meet the SBA’s size standards, as determined by an online tool available. Additionally, businesses must be at least 51% owned and controlled by U.S. citizen women, with women managing day-to-day operations and making long-term decisions.
Another objective is to award at least 3% of federal contract dollars to HUBZone-certified companies annually. To qualify for this program, small businesses must meet the SBA size standards, fulfill specific ownership requirements, and have their principal office in a HUBZone, among other conditions. Detailed information on these programs and other contracting opportunities can be found on the SBA website under the “Federal Contracting” tab.
4. Small Business Innovation Research (SBIR) Programs
Also referred to as America’s Seed Fund, SBIR initiatives allocate more than $4 billion in early-stage funding each year to technology-focused entrepreneurs, startups, and small businesses to transform innovative research and development concepts into commercial products and services. Although highly competitive, this program bestows over 6,000 awards annually, with an approximately 18% selection rate based on the past five fiscal years’ data. For further information, resources, and opportunities to participate, business owners can visit sbir.gov.
5. SBA Loan and Investment-Capital Programs
The SBA also extends several loan and investment-capital programs that can be invaluable to many companies. Entrepreneurs should recognize the SBA’s diverse programs, substantially supporting business growth and development. By tapping into these resources, small businesses can access the guidance and tools they need to thrive in a competitive landscape.