Your debt-to-income ratio usually gives a clear picture of your financial well-being. To calculate it, add up your fixed monthly debt payments, such as car loan or mortgage payments (you do not have to include expenses like utilities or groceries). Then divide the total by your monthly take-home pay.
Your ratio gives lenders a good indication of how much additional credit you will be able to handle. The Central Bank of the U.A.E has limited the debt-to-income ratio for unsecured consumer loans to 50%.
Creditors look at several key indicators when you apply for credit. You have considerable control over these factors based on how you manage your credit, so it's important to always keep them in mind.
How responsible you are about paying bills on time.
Your ability to pay back a loan based on your income and financial position.
Security for the lender in case you don't pay back the loan. A house, for example, would be used to collateralize a mortgage.
Positively changing your "3 Cs" will help improve your credit standing. The first two Cs are extremely important in developing your credit rating.
Once you have credit, you begin to build a credit history. Lenders use your credit history to gauge your ability to repay. So, a good or bad credit history can make a big difference in getting the loan, credit card or mortgage you need.
To maintain a good credit history, try practicing the following guidelines:
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