DBR full form in banking is debt Burden Ratio. In essence, DBR is a fancy method of describing the amount of your earnings you’re using to pay your debts. Consider loans, credit card charges and all other cash you are obligated to pay. It’s like looking at the amount of your income is scheduled each month, before even considering spending it on something else. How do you calculate your DBR? Simply take all of your debts and divide them by the amount you earn each month, minus tax and all that. This will give you a percentage which shows the percentage of your earnings goes towards settling your debts.
What else should you Be Educated about DBR?
In the beginning, it’s an important factor for banks to decide whether they’d like to lend to you cash or not. They can determine whether you’re a good candidate for lending which means you’re capable of repaying a new loan without worrying about the debt you already have. A high DBR? Red flag for lenders. Do you have a low DBR? Green light. There’s a lot more for you too. Monitoring your DBR can aid you in staying at the top on your finances. It’s a way to determine how much you’re eating than you can chew in terms of debt. Knowing where you stand will aid you in making better decisions concerning borrowing additional cash.
