More relevant data
Equifax now provides debt-to-credit ratio data on their credit reports. This information is valuable to consumers because it provides them with a glance at key information used by creditors to evaluate their ability to take-on and repay additional debt.

Comprehensive evaluation
The new data provides consumers with a debt-to-credit ratio on each type of loan, as well as a combined debt ratio total. The (3) three major debt categories, include mortgage loans, installment loans (personal and car loans) and revolving loans (credit cards debt).

The debt-to-credit ratio calculation
The debt-to-credit ratio is calculated by dividing the account balance by the account credit limit. To keep this factor from negatively impacting your credit score, it is advisable to try to keep the debt-to-credit ratio below 50 percent on each separate account (loans, credit cards, etc).

Here is a simple debt-to-credit ratio calculation. You have a balance of $3,500 on a credit card with a $9,000 credit limit. The calculation is as follows:
$3,500   =  38.88%.
$9,000

Other calculations used to evaluate debt load
A debt-to-income ratio is another calculation used by creditors to determine if you are carrying too much debt. A high debt-to-income ratio lessens your ability to take on more debt; whereas, a low debt-to-income ratio makes you a safer candidate to extend additional credit.

The debt-to-income ratio calculation is as follows: Monthly Debt Payments (MDP) divided by Monthly Take-Home Income (MTHI) = Percentage Ratio, or MDP/MTHI = %.

Your Monthly Debt Payments (MDP) includes credit cards, student loans, car loans, medical and dental bills, etc. However, other monthly expenses, such as mortgage or rent, utilities, and taxes are not included in the monthly debt payments total. Your Monthly Take-Home Income (MTHI) includes all sources of take-home income.

Here is a simple example of a debt-to-income ratio calculation.
(MDP)  Monthly Debt Payments    = $  900 (credit cards, car loan, personal loan)
(MTHI) Monthly Take-Home Income = $3,000 (employment income)

MDP    =   $  900  =  30%
MTHI   =  $3,000

DEBT-TO-INCOME RATIO ANALYSIS
• If the ratio is less than 10%, the consumer is very good candidate to grant more credit.
• It the ratio is between 10% and 20%, the consumer is good candidate to grant future credit.
• If the ration is between 21% and 35%, the consumer is becoming a more risky candidate to grant future credit
• If the ratio is higher than 35%, the consumer is considered a high risk to grant future credit.