How do you find a lender to approve your personal loan application when you have a high Debt to Income (DTI) ratio? Your DTI is not part of your credit risk score, but banks use the fraction to determine your ability to make future payments on time.

Divide your total monthly debt service payments by your monthly gross income. If that ratio is above 36%, you may find it very difficult to borrow more money – even if you have a good credit score.

People wanting to consolidate debts to lower their monthly payments need strategies to have their application approved. The two basic strategies involve looking in the right places and improving your percentage before applying.

High Debt to Income Ratio Approval

The first strategy for gaining an approval for an unsecured personal loan when you have a high debt to income ratio is to change denominator and/or numerator in the fraction. A lender may find your case more acceptable when you lower this number below certain thresholds. Each uses different criteria.

Request a debt consolidation loan from a specialty lender. These online companies focus on borrowers with high levels of existing obligations. They make the numbers work by stretching out the repayment timeframe to lower monthly payments.

The alternatives (debt settlement or boosting income) often take longer to work.

Decrease Monthly Payments

Reducing the amount of money you owe every month is the first way to improve your DTI ratio, and improve your chances for a personal loan approval. You could be able to accomplish this by simply adjusting the terms of your request, by moving money around in your accounts, or by working with a settlement company.

Lengthen Payment Terms

Longer-term loans have lower monthly payments. If you have a good credit score, you can lower your requested monthly payments by increasing the repayment terms. A consolidation request with a one-year repayment schedule has much larger monthly payments than one with a five-year schedule. Lenders consider your projected percentage based, in part, upon the size of new monthly payments.

Debt Settlement

Do you qualify for debt relief? If you have a bad credit score and owe more than $10,000, you may want to explore whether a settlement program is right for you. If your monthly payments are very high relative to your salary, this may be your most realistic option. A settlement program makes the most sense for people already behind on payments.

Transfer Balances

If you have open to buy on a credit card account, you may be able to pay off a smaller installment contract with a cash advance check. Open to buy is the difference between your revolving account limit and the balance you owe.

You still owe the same amount of money, but by closing one installment account, you may end up with lower monthly payments. The minimum payment on the credit card may be smaller as revolving accounts offer extra flexibility.

Increase Income

Increasing the monthly income that you can document is the second way to improve your DTI ratio, and enhance your chances of an online lender approving your personal loan request. You can boost the amount of revenue you show with a second or side job, requesting a joint account, or by utilizing a co-signer.

Side Job

Getting a raise, a second job or starting a side hustle is one sure, but often difficult way to boost the denominator in this key fraction. Anything that increases the amount of money flowing into your household each month makes the fraction smaller. You can also use the extra cash to pay down some of your revolving amounts owed.

Joint Account

Requesting a joint account is another way to demonstrate greater revenue and more diversified cash flow. Both factors enhance your odds of approval. If your spouse also works, adding his or her salary into the mix may help. Two salaries are more reliable than one, and present a safer bet for banks. Think diversification.


Adding a co-signer does not directly improve your percentage. However, a co-signer does lower the overall risk you present to the lender because the co-signer is also responsible for tapping into his or her income if you fall behind on payments – something that is very likely when your existing obligations consume too much of your monthly revenues.

Find Places that Lend to People with High DTI Ratio

The second strategy for gaining an unsecured personal loan approval when you have a high debt to income ratio is to look in the right places. If you do not have sufficient earnings to cover all your monthly payments, you are a high-risk borrower – regardless of your credit score. Most traditional lenders will shy away.

Take your request to lenders who specialize in subprime borrowers, and have them compete for your business.

Subprime Lenders

Subprime personal loan lenders specialize in funding requests for people with riskier borrowing profiles. If your credit score is reasonable, they may approve your request if the new funding does not increase your monthly debt burden ratio above specific thresholds.

Many traditional brick and mortar banks and credit unions cater only to the most qualified borrowers. If you have a high DTI, you may not fit their target profile. Your odds are much better with subprime specialists.

Online Lender Networks

Online lender networks allow you to complete a single web-based form. You can determine your projected interest rate without logging a hard inquiry on your file. Once you complete the documentation, a range of specialty investors may bid to fund your request.

This approach provides several advantages to you over applying to multiple direct lenders when you are seeking to consolidate other obligations.

  1. You complete only one online form
  2. Multiple investors review your qualifications
  3. You increase your odds of approval
  4. Only one hard inquiry appears on your report

You may be able to get a personal loan with a high debt to income ratio if you follow these simple steps.

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