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Credit & Finance

Why Your Credit Score Isn't the Whole Story

Jun 15, 2025
5 min read
By Ryan Hull
Why Your Credit Score Isn't the Whole Story

Why Your Credit Score Isn't the Whole Story

Your credit score gets all the attention, but experienced loan officers know it's just one piece of a much larger puzzle. Understanding what else matters can make the difference between approval and rejection.

Beyond the Three-Digit Number

Debt-to-Income Ratio (DTI)

This is often more important than your credit score:

  • Front-end DTI: Housing costs ÷ gross monthly income (target: under 28%)
  • Back-end DTI: Total monthly debts ÷ gross monthly income (target: under 36%)

    • Employment History

    Lenders want to see:

  • Stability: 2+ years in the same field
  • Income progression: Growing or stable earnings
  • Type of employment: W-2 vs. contract vs. self-employed

    • Assets and Reserves

  • Down payment source: Savings vs. gifts vs. loans
  • Reserve funds: 2-6 months of payments saved
  • Investment accounts: Shows financial sophistication

    • The Credit Score Reality Check

    What Your Score Really Means

  • 740+: Excellent (best rates available)
  • 680-739: Good (competitive rates)
  • 620-679: Fair (higher rates, more scrutiny)
  • Below 620: Challenging (limited options)

    • But Score Alone Doesn't Determine Approval

    A 750 score with 60% DTI gets rejected, while a 680 score with 25% DTI gets approved.

    How to Build a Strong Overall Profile

    1. Optimize Your DTI

  • Pay down high-balance debts
  • Increase income through side work
  • Avoid new debt before applying

    • 2. Document Your Income Properly

  • Keep 2+ years of tax returns
  • Maintain W-2s and recent pay stubs
  • Track self-employment income carefully

    • 3. Build Your Asset Base

  • Save consistently for reserves
  • Document all income sources
  • Avoid large, unexplained deposits

    • 4. Tell Your Story

  • Explain any credit issues honestly
  • Provide context for income gaps
  • Show improving financial trends

    • Lender Programs for Lower Scores

    Government Programs

  • FHA: 580+ score with 3.5% down
  • VA: No minimum score requirement
  • USDA: 640+ typically required

    • Alternative Documentation

  • Bank statement loans
  • Asset-based qualifying
  • DSCR products

    • The Professional Advantage

    Working with an experienced loan officer who understands the full picture can help you:

  • Choose the right loan program
  • Present your application optimally
  • Address weaknesses proactively
  • Navigate underwriter concerns

    • Remember: Your credit score opens doors, but your complete financial profile determines what's behind them.

    About the Author

    RH

    Ryan Hull

    Underwriting Specialist with expertise in complex loan scenarios

    Tags

    #credit score#loan approval#DTI#underwriting

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