Your debt-service coverage ratio is simply the amount of total debts owed to the total of all other debts you have. This is the amount of money you have to pay in interest and fees to the company on your credit card or loan accounts every month. It is important that you know how much you owe and that you have a certain amount of total debts before you start looking for a consolidation company. That way, you will know how much you can afford and what your options are for dealing with your debt issues.
The debt service coverage ratio has three main components to it. The first is the ratio of your minimum monthly payment to your total outstanding balance. If you have more debt on a card that is used less frequently, your ratio will be higher because the debt is used less often. As you move your balance from one card to another, you will start seeing a lower ratio.
The second component of the debt service coverage ratio is your total outstanding debt divided by your total number of credit cards. This is a good way to see how much money you owe to your creditors because you have the ability to compare debt services all at once. However, this does not take into account interest and fees. You also need to consider how long you plan to continue using the credit cards you already have. Keep these things in mind when you are making your decision about how much debt to have consolidated.