Debt Score – What Is It and Does It Matter?

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Many people have at least some idea of what their credit score is, but how many people know their debt score?  I stumbled upon the concept the other day and found this free tool to calculate my score… I figured I’d pass on the info for anyone interested.  I scored a 28, which was an “A”.  🙂

What is a debt score?

What's your Debt Score?
The Debt Score was developed by Oweing.com as a way to educate borrowers on how much debt is appropriate for their age, income, and education level.  The method for calculating your debt score is similar to the method used by mortgage lenders to calculate debt to income ratio.

What is debt to income ratio (DTI)?

The two main kinds of DTI are expressed as a fraction (e.g., 28/36).

The first fractional number, known as front-end ratio, measures the percentage of income going toward housing costs.  The second fractional number, known as back-end ratio, measures the percentage of income going toward all recurring debt costs, including housing.

The importance of your debt score

Let’s be honest… our credit score serves lenders more than it serves us.  It tells us if we can get credit but doesn’t help us determine how much debt is considered healthy for our age and income level.

Enter the Debt Score…

Most of us carry different types of debt at various stages in life.  For example… when we’re just starting out we may have student loans and credit card debt, then down the road we might acquire auto loans and a home mortgage.  Regardless of the type of debt or how old we are, it will always serve as an obstacle between us and financial freedom.

Your Debt Score helps reveal if you are carrying an unhealthy amount of debt for your age and income level, what debts are particularly troublesome, and what you can do to fix it.

Especially for those who got into debt early… knowing your score can help you get it back down to manageable levels.

What is my debt score?

I signed up to find my score and see how my Debt Free Adventure was progressing.

Here is a screenshot showing my results and how they arrive at the calculation (click to enlarge):

Debt Score

Click to enlarge

I received a 28 overall – which is an “A”.  My score showed me I’m doing well on housing and lifestyle, but that need to work on my student loan debt!

Looks like I’m doing pretty well… how about you?

Share your score in the comments.

What's your Debt Score?



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1 Chris

Thanks for the share Matt, I am going to have to check this out.

2 Peter Renton

Interesting stuff Matt. I had never heard of a Debt Score before but this makes a great deal of sense. As you say, this could be far more helpful than a credit score number, particularly when combined with some goal setting to try and get a better score over time.

3 Jon | Free Money Wisdom

Interesting post Matt, I’ll have to check out my debt score haha. It definitely sounds more helpful than a credit score. I’ll be checking out both of mine in the next month or so.

4 Matt Jabs

Cool, be sure to brag about it here. 🙂

5 DUstin

I scored a 12 . I am debt free other than an extremely manageable mortgage.

6 Matt Jabs

Nice work Dustin… I hope to join you sooner rather than later!

7 mindy

I did this and it scared me a bit. I like it though. I have too much credit card. thanks for posting about it.
i like your blog

8 Matt Jabs

My pleasure Mindy. If you have a lot of credit card debt you should consider using DebtGoal for help getting out.

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