Your debt-to-income ratio is all your monthly debt payments divided by your gross monthly income. This number is one way lenders measure your ability to manage the payments you make every month to repay the money you have borrowed.

When you apply for new credit the lender wants to make sure that you have the ability to handle another payment. Your credit score by itself cannot provide him with all the information he needs to evaluate your ability to take on new debt.In addition to you credit history he calculates your debt-to-income ratio which helps him decide whether to approve or deny the loan or, how much to lend.

This tutorial will show you how to calculate your Debt-to-Income ratioI.