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Q: I checked my credit score recently and it had gone up quite a bit, so I was feeling confident when I applied for a loan. But the lender still declined me. I make my payments on time and pay everything off eventually. What am I missing? —Marty

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FP Answers:Credit scores get a lot of attention, but a score is only one of several things a lender weighs when reviewing an application. What happened to you is quite common, and understanding the full picture can help you improve your situation.

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A credit score tells lenders how reliably you have managed credit in the past. It reflects factors such as your payment history, the length of your credit file, how often you have applied for credit, the mix of accounts you hold and how much of your available credit you are using. A rising score means you are doing those things better than before.

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What the score does not capture is whether you can afford more debt. That assessment happens separately, and it draws on information your score never touches such as your income and employment and how much you already owe relative to what you earn.

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For non-mortgage borrowing, most lenders calculate your total debt service ratio, or TDS. It compares your total monthly debt obligations, including your rent and heat, against your gross monthly income. If adding the new payment would push that ratio too far past 40 per cent, the application may be declined for a high debt load, regardless of your score.

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Lenders determine their own lending criteria. Some are stricter than others and will calculate a minimum payment amount for credit cards you do not normally use. So, if your existing obligations already take up a significant part of your income, a lender may not see room for more, even if your payment history is spotless.

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Before applying again, do the math yourself. Add up all your monthly debt payments, divide by your gross monthly income and see where you land. Paying down existing balances before applying can shift that ratio in the right direction and strengthen your overall application.

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You mentioned that you pay everything off eventually. That matters, and lenders look at your credit utilization. This is the percentage of your available credit compared to what you owe. Even if you pay in full each month, if your balance is high when the statement closes, that high utilization is what gets reported.

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Many Canadians run most of their spending through a single card to collect points, which means the balance can be high at the end of each billing cycle even if it gets paid off each month. Your score takes a snapshot of that balance and does not reflect the full repayment pattern.

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Your employment history also plays a role and lenders want to see stable, consistent income for at least three months. A recent job change is not automatically a disqualifying factor but it can introduce uncertainty. Lenders prefer continuity; ideally at least two years with the same employer or within the same industry. A work history that shows steady progression in a field reads better than one that shows frequent unrelated changes.