Debt-to-Income Ratio Worksheet

What is the debt-to-income ratio?

• The amount of money saved compared to income

• The amount of debt compared to income

• The percentage of income spent on rent

• The percentage of income spent on food

How do you calculate the debt-to-income ratio?

• Add up income and debt, then divide by two

• Subtract debt from income and multiply by 100

• Divide total debt by total income, then multiply by 100

• Multiply debt by income and divide by 100

What is considered an excessive debt-to-income ratio?

• More than 50%

• More than 40%

• More than 36%

• More than 25%

Which of the following is NOT included when calculating the debt-to-income ratio?

• Car loans

• Student loans

• Grocery expenses

• Credit card debt

What percentage do experts recommend keeping your debt-to-income ratio below?

• 50%

• 45%

• 36%

• 30%

What is the best way to lower your debt-to-income ratio?

• Take on more loans

• Increase your income and reduce debt

• Apply for a new credit card

• Ignore debt payments

Why is it important to have a low debt-to-income ratio?

• It helps secure better loan terms

• It increases your interest rates

• It makes you appear riskier to lenders

• It decreases your income

The best way to manage debt effectively is to:

• Take out more loans

• Pay only the minimum amount due

• Create a budget and reduce unnecessary expenses

• Ignore it and hope it goes away

What does it mean to be creditworthy?

• Having a lot of credit cards

• Being responsible when repaying borrowed money

• Borrowing as much as possible

• Ignoring credit reports

Which of the following is NOT a type of credit?

• Credit cards

• Installment loans

• Grocery purchases

• Service credit