I recently worked with a client seeking a bank-statement loan that required a 660 credit score, but she was sitting at 640.

I reviewed her credit report and asked which debts she could comfortably eliminate without using funds needed for her down payment or closing costs. I considered several options: paying down revolving balances, addressing two small collection accounts, and reducing her monthly obligations.

We first paid down her credit cards to lower her utilization and resolved the collections. Once her credit improved, I noticed her debt-to-income ratio was still too high. She had a car loan with a low remaining balance but an unusually high monthly payment. Paying it off gave us the greatest reduction in monthly debt for the least amount of cash.

By addressing both her credit score and debt-to-income ratio strategically, we positioned her to qualify for the bank-statement loan she needed.