Question

which statement about the debt-to-income (dti) ratio is true?
a dti is a significant factor in calculating your credit score.
b a lower dti makes it easier to manage debt and handle unexpected expenses.
c a dti of 50% or higher is generally considered ideal for most individuals.
d lenders do not consider dti when approving loans.

Explanation:

• Option A: DTI is not a factor in calculating credit scores (credit scores consider factors like payment history, credit utilization, etc.).
• Option B: A lower DTI means less of one’s income is going to debt, so it’s easier to manage debt and handle unexpected costs. This is correct.
• Option C: A DTI of 50% or higher is generally not ideal; lower DTI (e.g., below 36%) is preferred for most.
• Option D: Lenders do consider DTI as it shows a borrower’s ability to repay, so this is false.

Answer:

B. A lower DTI makes it easier to manage debt and handle unexpected expenses.