These days, people are pretty savvy when it comes to credit scores. They’re more widely available today than ever before, so many of us are aware of our 3-digit score.
But do you know a couple other key measurements of your financial success? Namely, your Debt-to-Income (DTI) ratio and IRS-filed income?
Scratching your head?
Your DTI ratio is a number that measures how much debt you have in relation to your gross income. To put it another way, it’s the percentage of your income that goes towards paying your debts each month.
If you’re a homeowner, you might be familiar with DTI. According to the Consumer Finance Protection Bureau, a 43% debt-to-income ratio is the highest you can have to be considered for a mortgage. That’s why a lender might recommend that you pay down debt before getting pre-qualified for a mortgage.
Of course, if you want to know your DTI, you can do a fancy calculation just to prove to your high school math teacher that yes you do use math in real life. Or, you can just download a new app that I just learned about, and they’ll do it for you (for free!).
The app is Turbo, created by Intuit (the minds behind TurboTax and Mint) and is completely free too, which is a bonus. Turbo is really simple to use, and with its sharp design, very easy on the eyes!
Here’s how it works: Add your information into Turbo (all data is encrypted for extra security) and let Turbo run the numbers for you. If you’re a TurboTax user, they’ll import your information for you from last year’s recent tax return! Then, Turbo will show you your credit score, your verified income, and also calculate your DTI. They’ll look at all three of these numbers together and tell you what your financial health looks like, whether it’s good or might need some work.
According to Turbo, bringing these three numbers together gives you the most comprehensive view of your total financial health. It also gives you a glimpse of what lenders may look at when considering whether or not to give you a loan.
Luckily, Turbo won’t leave you hanging if you discover you need to make improvements. If you want help increasing your credit score or lowering your DTI to the ideal 36%, Turbo will offer helpful hints on how to do that, personalized to your unique financial situation. They also offer 24/7 credit monitoring. In fact, they’ll send you a notification if something changes on your credit report, just so you can double check that it was actually you and not some hacker.
Needless to say, I love harnessing the power of technology to help me see my most important financial numbers in one place. According to Turbo, only 12% of millennials feel very prepared for their future financially, so this is one way they’re giving back to make sure everyone has access to their three most important financial numbers.
If you’re already hooked up to Turbo, leave a comment and tell me how you like it!