How to Improve Debt-To-Income Ratio When Applying for Personal Loans Online

30-07-2018 | Ramona |

Finance ratios are shortcuts to running a quick glimpse over financial insights of an individual or a company.

The debt-to-income ratio is yet an effective method to evaluate a person’s monthly income and debt burden.

The ratio of 50% or above is the most prone to loan defaults while a range between 35-49% is deemed to be a bit safer but still on borderline.

Ideally, your debt-to-income ratio should fall below 35% if you are looking forward to applying for a loan online that is easily manageable.

Here we have summed up some of the most effective ways to improve your debt-to-income ratio for you, have a look:

Restructure Your Budget

Now this one is quite obvious and a universal fact indeed that you need to look into your own financials before making changes to external forces.

List out all your monthly expenses and liabilities to see where you can make adjustments to save an extra buck.

Avoid having frequent dinners at restaurants. Prefer staying at home…

If you make every possible change to your spending habits, you might save an extra dollar at the end of the day; and that will surely accumulate to a handsome amount every month.

This way, you’ll be able to manage your outstanding liabilities and eventually be blessed with a lesser debt-to-income ratio.

Here’s one tip: The next time you go to a shopping mall, put your credit card at home. The credit card facility eventually turns into a ‘liability’ and thus you are more likely to spend on unnecessary things. Be smart!

Make a Job Switch / Start Your Own Small Side-Business

Look into new hiring opportunities every other day. If you have pretty much of spare time at hand, consider getting yourself a part time job or start your own small business that best interests you. Here are some decent ideas to get started with:

  • Good at drawing? Become a painter!
  • Love children? Become a babysitter!
  • Possess an online skill? Become a freelancer!

The opportunities are endless in this virtual world. All you need to do is to tap them at the right time. Just make sure that you don’t lose out on your current job while making your extra efforts!

Make Balloon Payments or Consolidate Your Payments

Paying in bulk and at once could save you extra cash. Let’s say you are bound to pay your cable bills and internet bills separately.

Try merging them to a single service provider and you will definitely be able to shrink down that consolidated amount which was previously being paid in two different lieu.

Also look for different packages and offers that you could avail associated to the things you buy or pay for on a monthly basis.

If you are lucky enough to make balloon payments (holiday periods) – that some lenders offer – make them. You might see your debt-to-income ratio spiking in the start, but in a matter of few days or months, you’ll realize that it was a smart move by you!

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