Reduce Your Debt to Income Ratio to Improve Your Credit Score

Your Debt to Income Ratio is your total debt divided by your income. If your total debt is $40,000 and your income is $40,000, your debt to income ratio is 100%, meaning it takes a full year's worth of income to pay off your debt.

If you have a mortgage of $120,000, you have added 3 more years of income or 300% to the ratio.

Most people do not realize that your debt to income ratio has a heavy effect on your credit score, even more than on-time payments. Paying off debts has a very positive effect on your credit score.

Clients in our program are getting completely out of their unsecured debt load in 18-39 months and seeing much higher credit scores as a result. Get on our MMA Mortgage Reduction program as well, and see your score go much higher in just a few years. The mortgage reduction program can been seen at: http://www.u1stfinancial.net/achieveunlimited

Why is this the case? Logically, if someone has debt which will take years to repay, they are at much higher risk of a negative life event: loss of job, disability, etc., and a higher credit risk.

Need credit counseling? Don't make hasty choice by "The Motley Fool"

This is the text of an article from "The Motley Fool":

Question: Should I use consumer credit counseling organizations (CCC) to help me get out of debt? Do they have any drawbacks?

Answer: Be careful with such outfits. Using them can do serious harm to your credit rating. If your credit report reflects that you've sought professional help, it can decrease your credit score significantly--sometimes as much as a bankruptcy can. Worse, while you proceed to dig your way out of debt (and sometimes for years afterward), many mortgage lenders won't consider you for a loan.

Roger's comments: CCC companies were started and supported by the credit card companies. They will show on your credit report as "third party payers." You will be paying interest. Most times, you cannot buy a car either.

The program we recommend is debt negotiation. You have the federal right to arbitrate your debts, which our law firm exercises for you. It does not show as a third-party payer, because you are actually paying from your own escrow account. You will pay no interest.

Know What You're Up Against - Video 5

Efforts at reform:
http://www.pbs.org/wgbh/pages/frontline/shows/credit/view/5_hi.html

Know What You're Up Against - Video 4

More complaints than any other industry:
http://www.pbs.org/wgbh/pages/frontline/shows/credit/view/4_hi.html

Know What You're Up Against - Video 3

Frontline details the credit reporting agencies:
http://www.pbs.org/wgbh/pages/frontline/shows/credit/view/3_hi.html

Know What You're Up Against - Video 2

Frontline details the Credit Card Industry's Best Customers:
http://www.pbs.org/wgbh/pages/frontline/shows/credit/view/2_hi.html

Know What You're Up Against - Video 1

Frontline details the biggest change in the Credit Card Industry:
http://www.pbs.org/wgbh/pages/frontline/shows/credit/view/1_hi.html