It's common knowledge that lenders use your credit score (a mathematical calculation based on information on your credit report) when making lending decisions. But lenders also like to review your debt-to-income ratio.
To calculate your debt-to-income ratio, add up all your monthly debt obligations, including your mortgage, home-equity loans, auto loans, student loans, minimum credit card payments, and other debts. Divide that number by your monthly gross income to find your debt-to-income ratio.
To be considered a good candidate for debt, that number should generally fall below 36%. Go much higher than that, and you are likely to have trouble getting additional debt or debt will carry higher interest rates or significant fees.
Lenders review both your credit score and your debt-to-income ratio, because your credit score is simply a payment of your past payment history and does not indicate how much debt you carry in relation to your income.