Tag Archives: Credit Scores

Why mortgage applications get rejected?

Why mortgage applications get rejected?

If you are looking to get approved for a mortgage, look for approval information instead of asking why mortgage applications get rejected. The stress and anxiety of cleaning up your credit score and having years of good income showing on your taxes are only two of many steps your mortgage lender may assign on your tasks to get approved for a mortgage. Remember that an experienced mortgage broker will have a good idea of your chances of approval based on your current financial situation and what your options may be. They know that when they do the hard pull on your credit score that you will be within a thirty-day window to shop your application to a few companies they work with and see who is interested in giving you a home loan on good terms.

It is important to listen to your mortgage broker’s advice, assuming you trust them, and not worry much about all what is there to read on the Internet. Remember that some articles are “click bait” and are intended to appeal to your emotions instead of logic.

But, because you may be curious why mortgage applications get rejected, here are some reasons listed in this short article summary of “5 Mortifying Reasons Mortgage Applications End Up in the ‘Reject’ Pile,” published on Realtor.com:

  1. You did not use your credit cards enough. Using your credit cards and paying them off regularly makes you a better credit risk and your credit card issuer will increase your available credit line, and that means, so long as you don’t max the card out and make minimum payments, rather by leaving a significant amount of available credit, your scores will continue rising.
  2. Your new credit card accounts are too new. When you open a new credit card account, such as a department store card, your credit score will take a short dip and then bounce back up and should be higher if you have more new credit available and not being used. Therefore, your mortgage broker will tell you to not get any new credit, buy anything big or take on any new loans when you are within months of submitting your mortgage application.
  3. Failure to pay certain medical bills. Talk to your mortgage broker about any outstanding medical debts that have not been paid. They might suggest you negotiate a small but reasonable payment plan with the hospital so that a positive report shows on your credit. Be cautious, however about making deals to compromise and wipe out the balance for a decreased settlement amount because that could have a negative credit impact.
  4. Too recent a job change. Length of employment is a reasonably acceptable factor that tends to indicate whether you will be a good credit risk. If you have lengthy employment, that is a positive factor and once you are at your new position for a while, your score will bounce back up. That said, if you know you are going to apply for a mortgage, hold off on the job change if possible.
  5. Lying on your mortgage application, aka mortgage fraud. Do not inflate your financial status on a mortgage application. There are multiple levels of financial professionals who comb through details of your application. On paper, you are being judged on your credibility and trustworthiness and any dishonesty on your mortgage application is like sending up a big red flag to the lenders to tell them to take a pass on you. You may be surprised that the income or credit score required to be approved may be more achievable than you realize. Once again, so you do not need to ask why your mortgage applications was rejected, consult with the best mortgage broker you can find and follow their instructions.

Joseph Wrobel and his associates and staff at Joseph Wrobel, Ltd., want you to take control over your finances. You would be surprised how soon you may be able to qualify for a mortgage after financial problems including bankruptcy. Remember, what is important is not what you did before a bankruptcy, what matters is what you do every day afterwards. To learn more and to schedule a consultation, call Joseph Wrobel, Ltd., at (312) 781-0996 or Contact Us on ChicagoBankruptcy.com.

Beware of credit repair scams

Credit repair scams are unfortunately common and it is important to do your homework and research a company who makes claims they can repair and rebuild your credit score and reputation. Many people worry that filing for bankruptcy and taking advantage of the laws to help get a fresh financial start will cripple their credit forever. In many cases, bankruptcy filers are pleasantly surprised how easy it is to get a loan for a home or car, or get a new credit card within a number of months after a bankruptcy. When you have fewer active debt and collection liabilities, you are likely better able to pay your bills and be approved for credit. You might pay a higher interest rate on a loan, but the amount of debt discharged in a Chapter 7 or 13 bankruptcy makes the trade off worthwhile.

The Federal Trade Commission offers free information to help consumers spot and report credit repair scams. You’ll know you’re encountering credit repair fraud if a company:

  • insists you pay them before they do any work on your behalf
  • tells you not to contact the credit reporting companies directly
  • tells you to dispute information in your credit report — even if you know it’s accurate
  • tells you to give false information on your applications for credit or a loan
  • doesn’t explain your legal rights when they tell you what they can do for you

Examples of recent credit scams and alerts to consumers to beware:

A court responded to the Federal Trade Commission request to stop the operations of First Time Credit Solutions, a credit repair company allegedly posing as an affiliate of the FTC when marketing to Spanish-speaking consumers. The complaint alleges marketing as “FTC Credit Solutions” and used a false affiliation with the federal agency to sell fraudulent credit repair services. The company guaranteed a 700 or higher credit score to its customers within six months or less.[i]

In another credit repair scam, a Florida company was fined $7.4 million by the FTC and ignored court orders to cease and desist from selling their illegal credit repair system. The owners of the company operated under several names: BFS Empowerment Financial Services, Inc., Help My Credit Now Credit Services, Inc., and Kevtrese Enterprises, Inc. These companies claimed they could permanently remove negative information on credit reports, even when the negative information was actually true and correct.

Joseph Wrobel, Ltd., can refer clients to reputable credit repair companies that do not make outrageous claims and make false or illegal promises.

A general rule applies to credit repair as it does in any business, if it seems too good to be true, it probably is. We have relationships with reputable credit repair companies who are especially helpful when you may have lingering negative information on your credit report about debts that were discharged in bankruptcy.

Joseph Wrobel, Ltd. helps people get control of their finances and a fresh start at financial freedom. The firm’s website contains informative videos about financial issues as well as bankruptcy protection for families who want a fresh start.

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[i] New America Media, Court Shuts Down Credit Repair “Scam” that Targeted Latinos, by George White, Apr. 114,2015.