Understanding Credit and Debt
Read through our variety of credit and debt topics to find tips and techniques you can use to help you better manage your finances.
Debt vs. Income
Keeping your debt under control is important, and one way to easily manage your debt outlook is through a percentage known as the debt-to-income ratio, or DTI.
To calculate your DTI, first add up all of your debt payments. This includes credit cards, car loans, student loans, other debts and your housing expenses (rent, mortgage, property taxes, and insurance). Then take the total of your debt payments and divide it by your monthly gross income (before taxes) and multiply it by 100 percent. This number is your DTI.
Many lenders prefer a DTI to be around 36% or lower in order to qualify for loans. If your DTI is around or higher than 36%, you may want to consider trying to lower it by doing one or more of the following:
- Increase your monthly debt payments
- Avoid taking on more debt
- Hold off on bigger purchases
- Recalculate your DTI regularly to track your progress
Visit our Financial Calculators page to learn more about your overall financial picture.
Improve Your FICO Credit Score
Maintaining a good credit score is essential for those looking to borrow. A good credit score, according to many lenders, used to be a FICO score of above 620, although in recent times, many are now considering a FICO score of 680 and above as the goal. Lower FICO scores typically are classified as higher risk, making it harder for you to get approved for loans. There are many ways to help raise your FICO credit score, including the following:
- Make all of your debt payments on time every month
- Avoid borrowing too much
- Pay more than the minimum required payment
To help monitor and maintain a healthy FICO credit score, it is highly recommended to check your score every 3-4 months. You can obtain an annual free copy of your credit report by using www.annualcreditreport.com, the only authorized online source for a free credit report.
You may also want to consider enrolling in a credit monitoring service to help you stay up-to-date on your important credit information.
These techniques and more can help you better manage your debt. To find more ways to improve your FICO credit score, visit the Federal Reserve's website.
Protecting Your Financial Information
Don't let fraudsters steal your personal information. Taking proper precautions with your banking transactions can help you avoid becoming a victim of fraud, giving you more control over what happens with your credit rating.
So what steps can you take to protect your information?
- When logging in to Online Banking, before entering your password, always confirm that the Security Image and Phrase shown is the one you selected.
- Set up email and mobile alerts to notify you when your account balance* is low, warning you of a potential threat.
- Make sure that your antivirus software is up to date, and that you have all the necessary protection tools installed.
- Sign up for Online Statements to help reduce your risk of account take-over or identity theft.
Our Security Center has more information about fraud, along with additional ways you can help protect yourself.
* The most accurate record of your account balance is your own payment register. Any balance information provided by Bank of the West, whether in a document, online, by telephone, or in person, will not reflect un-posted payments.