The Home Buying Institute recently unveiled some of the most common reasons why prospective buyers are denied being approved for a mortgage application, and chief among them is having bad credit.
As the HBI states, lenders check borrowers' credit scores in order to determine how well they've paid off their past debts. Most lenders judge this based upon the borrower's FICO score, which is a three-digit number that ranges from 300 to 850 and is measured by a variety of factors such as amounts owed, payment history and types of credit used.
In an interview with HBI, Carolyn Jordan, an executive with the Neighborhood Credit Union based in Dallas, said borrowers with a FICO score less than 600 typically will be denied a home loan.
Other common reasons for why borrowers may be denied a mortgage, according to the HBI, is a down payment on a home that's too small and having too much debt.
While some debts may be legitimate, credit companies can sometimes make mistakes and may report an errant negative mark — like a delinquent mortgage payment — on a person's report, causing that individual to unfairly suffer from bad credit. By working with a credit lawyer, however, a consumer may be able to get a quick credit boost by holding the company accountable for not practicing fair and accurate credit reporting.