The Debt-to-Income Ratio for a Credit Card Hardship Program

If you're having trouble making your minimum payments to your credit card company, a hardship program might be just what you need to get yourself caught up. However, the requirements for such programs are difficult to understand. A critical factor in a creditor's decision to offer you a hardship program is your debt-to-income ratio.

Credit Card Hardship Programs

A credit card hardship program is a program administered by credit card companies that helps you to make your monthly payments and begin paying down your outstanding balance. Each creditor has its own way of providing assistance and its own criteria for admission. The benefits of these programs usually include interest rate breaks that range from six months to five years.

Debt-to-Income Ratio

While credit card companies don't list the criteria to join a hardship program, they do look at many factors relating to your financial situation. One of the qualifications for a credit card hardship program is your debt-to-income ratio, which shows how much you owe in relation to how much you make. In other words, if you owe a very large percentage of what you make, the creditor might not want to give you any breaks because such a high ratio shows you're not a responsible credit manager. Since credit card hardship requirements aren't documented, a specific debt-to-income ratio for inclusion in such a program is unknown; however, Bankrate states that a debt-to-income ratio lower than 36% is ideal.

Getting Into a Hardship Program

Not only do credit card companies not list the requirements for getting into a hardship program, most banks don't even acknowledge the existence of these programs. The only way to get in is to call your credit card company and see what they can do for you. This sometimes requires calling multiple times or asking for a supervisor. Even if you're not comfortable with being tough on the phone, the potential benefit is well worth a few tense minutes with a customer service representative.

Credit Counseling

Hardship programs are good if you're in trouble with only one or two cards. On the other hand, if you have many cards and they're all maxed out, entering hardship programs with all of these creditors can be very time-consuming. You can always try to seek out the help of credit counseling, which provides many of the same benefits as a hardship program, but all of your cards are covered. The downside is that you'll have to close all of your cards out to qualify. Credit counseling is far better than debt settlement or bankruptcy in terms of how it's viewed on your credit report and your chances of recovering from your setbacks.