How to Build Your Credit – Wells Fargo

While this isn’t directly part of how your credit score is calculated, your debt-to-income ratio (DTI) helps determine if you can comfortably afford to make your payments. DTI is is the percentage of how much you make each month that you have to pay on recurring payments, like a credit card. When you apply for credit, lenders evaluate your DTI to help determine whether you can afford to take on another payment. If your DTI gets too high, it can negatively affect your ability to pay your bills on time, which impacts your credit score. Standards and guidelines vary, most lenders like to see a DTI below 35% but some mortgage lenders allow up to 43─45% DTI, with some FHA-insured loans allowing a 50% DTI. For more on Wells Fargo’s debt-to-income standards, and to learn what your debt ratio means, use our online Debt-to-income calculator.