People get denied with a 760 score all the time and can’t figure out why. The score is a summary of how you’ve handled credit. It says nothing about whether you can afford the thing you’re applying for right now.
That’s a separate set of numbers, and underwriters care about them just as much.
Debt-to-income ratio
Add up your required monthly debt payments — mortgage or rent, car loan, student loans, credit card minimums, child support. Divide by gross monthly income. That’s your DTI.
Make $6,000 a month and owe $2,100 in payments, you’re at 35%. Most lenders start getting uncomfortable somewhere in the low-to-mid 40s for unsecured lending. Conventional mortgages often cap around 43% to 50% depending on the program and how strong the rest of the file looks.
The frustrating part: DTI uses gross income, before taxes and before your 401(k) contribution and health insurance come out. So the ratio the lender sees is friendlier than the one your bank account experiences.
Two ways to move it. Pay off a small loan entirely — killing a $340 car payment does more for DTI than shaving $340 off a mortgage balance, because DTI counts payments, not balances. Or increase documented income, which is slower.
How long you’ve been at your job
Two years of steady employment in the same field is the traditional comfort zone. Job-hopping within an industry is usually fine if income went up. Switching industries, going from W-2 to self-employed, or a gap in the last year all get scrutiny.
Self-employed borrowers have it hardest — most lenders want two years of tax returns and will use your net income after deductions. Write off aggressively for three years and then apply for a mortgage and you’ll discover you’ve optimized yourself out of qualifying.
Reserves
For mortgages especially, lenders want to see money left over after closing. Often measured in months: two months of payments in reserve, six months for tougher files. It’s not a hard requirement everywhere, but it’s a compensating factor that can offset a marginal DTI.
Money that appeared in your account last week gets questioned. Large non-payroll deposits need a paper trail. If someone’s gifting you a down payment, do it early and document it.
The specific loan matters
Loan-to-value ratio on a secured loan, the age and mileage on a car, the appraisal on a house. A borrower who looks identical on paper gets a different answer on a 95% LTV loan than on a 70% one, because the lender’s downside is different.
Recent behavior on the credit file
Score aside, underwriters read the actual report. Six new accounts in four months is a flag even if the score held up. So is a pattern of maxing cards and paying them down repeatedly. So is a collection from eighteen months ago that barely dented your score but sits there in plain text.
What to do about it
Three to six months before you apply for anything significant: stop opening new accounts, pay down the balances with the biggest minimum payments, don’t change jobs, and let your bank statements get boring.
A great score gets you in the room. The rest of this decides whether you leave with the loan.