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Financial Health By State

20 April 2018 No Comment

Ever wonder how well your financial health stacks up compare to the next person’s? Comparisons can be complex since many factors come into play, such as earnings, age, and type of debt. One of the best ways to make a fair comparison is by calculating your debt-to-income (DTI) ratio.

How to Calculate Debt-to-income

The DTI is a quick way to reveal how well you manage your money. In fact, some lenders use this number to decide if they will approve a loan application. Calculating your DTI is easy. You simply divide your total recurring monthly debt by gross monthly income. Multiply the result by 100, and this is your DTI expressed as a percentage.

Where You Live Matters

National DTI averages are available, however, comparing your numbers to others in your state make more sense. Recently, Credible released a report that gives you the data needed to make this comparison. The analysis was based on proprietary data from 540,000 borrowers and used credit card, student loan, and housing debt to calculate DTI. The numbers are quite revealing. Remember, the higher the percentage, the worse the financial performance.

Here are the top 5 performing states with the best dataset DTIs on average:

  1. Michigan 25.27%
  2. Arkansas 25.62%
  3. Delaware 26.74%
  4. Kentucky 26.82%
  5. Missouri 27.34%

Here are the worst 5 performers, with the worst DTIs:

  1. Hawaii 36.15%
  2. Washington 32.40%
  3. Colorado 32.22%
  4. Oregon 32.21%
  5. Montana 32.06%

Didn’t find your state? Check out the full Credible report: Burdened by Debt: The Best and Worst States at Managing Debt.

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