Definitions for "Credit Ratio"
Keywords:  fha, gross, conventional, ratio, net
Credit Ratio is figured differently depending on the loan. For a FHA/VA loan it is figured by taking the borrowerâ€(tm)s monthly payment and dividing it by there income after taxes. Credit ratio for a conventional loan is figured by taking the amount of the monthly payments that the borrower owes and dividing it by their monthly income before taxes.
A report of an individual's credit history prepared by a credit bureau and used by a lender in determining a loan applicant's creditworthiness. See Housing Expenses-to-Income Ratio.(Return to the top of the page.)
The ratio, expressed as a percentage, that results when a borrower's monthly payment obligation on long-term debts is divided by the borrower's net income (for FHA/VA loans) or gross monthly income (for conventional loans). See also Expense-to-Income Ratio.