How to Get a Debt Consolidation Loan When Your Debt-to-Income Ratio Is High

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A debt-to-income ratio (DIR) is a ratio used by lenders to determine a consumer's ability to repay a loan. Most lenders look for a DIR well below 50 percent, even lower if you are applying for a secured loan--like a mortgage or home equity loan. If you have a high DIR, there are ways to reduce this ratio so as to qualify for a debt consolidation loan.

Pull a copy of your credit report. Visit the website This is a federal site designed to give consumers a free copy of their credit reports. You'll need to pay for a copy of your FICO score, too. A FICO is a three-digit number that shows lenders your overall creditworthiness, as this may give you leverage with lenders.

Add up all of your monthly credit-reportable bills. This is especially helpful if you are planning on wrapping your bills into a secured consolidation loan. Determine the total loan amount of a consolidation loan. Make sure, if you are getting an equity loan, that you have enough equity in your home to cover this loan amount.

Calculate your DIR with all of your bills now. Divide all monthly credit-reportable expenses by your monthly gross income. Keep this figure. This is the high DIR percentage.

Estimate what a consolidation loan payment will be for a full consolidation. Estimate high. Look at current rates and choose a fair rate for yourself based on your credit. Use a calculator to determine the monthly payment (See Resources).

Calculate a new DIR with this monthly payment. You need not include all other bills in the DIR calculation since they will be paid with the consolidation loan. This will dramatically lower your DIR.

Report any other income to your lender, even if it's under-the-table work or tips. Many lenders have stated income programs that will reduce your DIR percentage.