Your credit report is a record of your borrowing and repayment activity from the last seven years. It includes a lot of your financial data, but not your income. You can calculate your debt-to-income ratio by adding up all of your monthly bills and dividing them by your monthly income.
What's On Your Credit Report
Your credit report contains personal identifying information such as your name, date of birth, Social Security number, current and past addresses, and driver's license number. It also includes all of your borrowing activity from the past seven years, including mortgages, credit cards, loans, car leases, store cards, even cell phone contracts. If you've been to court over your finances, the court judgment will be in your credit report, as will any liens.
What Is Not On Your Credit Report
Your credit report does not include information about your income. It may include the name of your employer, but not how much you earn. A credit report has no record of your savings. It also does not state your ethnicity or religion affiliation.
Debt-to-Income Ratio
Before lending you money, a creditor will calculate your debt-to-income ratio to decide whether or not you can afford another monthly repayment. You will have to state your income on the application, as it is not included in your credit report. By combining the information from the application and the credit report, the creditor can get a good idea about your financial circumstances. In certain cases, the creditor will call an employer to verify that the applicant did not lie on the application.
Debt-to-Credit Ratio
Another important number is your debt-to-credit ratio. It's a measure of how much of your credit line you are using. A lender can calculate this number solely from your credit report. A high debt-to-credit ratio will make you look overstretched. It can hurt your credit score and make you look like a high-risk borrower. Avoid maxing out your credit cards to keep this number low and your credit score high.
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