Afraid to Check Your Credit? Fearful of Being Denied? It May Not Be the End—but the Beginning

(Note: Now you can listen to our AI podcast hosts, Frosty and Bailey, kick around the ideas presented in the interview at: https://RethinkingRE.com/Podcast)

Buying a home is often seen as a monumental task—an intimidating maze of credit scores, financial hurdles, and long-term commitments. Many people hesitate to even check their credit score, fearing it’s too low. Others put off applying for a mortgage altogether, afraid of rejection.

But what if the process wasn’t as overwhelming as it seemed? What if a mortgage denial wasn’t the end, but rather the beginning of a well-planned financial strategy?

We sat down with mortgage expert Kirk Rau of CrossCountry Mortgage to discuss what really happens when a mortgage is denied, how buyers can turn rejection into an opportunity, and why homeownership is about far more than just wealth—it’s about stability, happiness, and control over your future.

A mortgage denial can feel like the ultimate roadblock—a door slamming shut on your dreams of homeownership. But according to Kirk, a denial is not the end of the road; it’s simply a roadmap pointing to the exact steps needed to get approved in the future.

“You cannot improve until you know where you are,” Kirk explains. “Getting your credit checked allows you to see exactly what steps you need to take. Many times, people assume their score is lower than it actually is, or they don’t realize how quickly they can improve it.”

Rather than feeling discouraged, Kirk encourages buyers to embrace the process—sitting down with a mortgage professional to map out a clear, realistic timeline for qualification.

We have a client—who when they were a 23-year-old first-time homebuyer-- was denied a mortgage due to a low credit score of 600. Understandably, they were frustrated and felt like homeownership was out of reach.

But rather than giving up, even though they thought about it, we worked side by side with them over the next year to strategically rebuild their credit.

• Here’s how we helped them turn their denial into a financial turning point:
  ✔ They didn’t have enough credit history, so we helped them choose the right credit cards to build their score effectively. Instead of applying for multiple random cards, they got one secured card and one major credit card that worked in their favor.
  ✔ They made small, manageable charges each month, then paid them off completely to build a history of responsible usage.
  ✔ They focused on paying down the right debts. Contrary to popular belief, paying off the wrong debt—like certain medical bills—can actually lower your score. We carefully prioritized which debts would give them the biggest credit boost.
  ✔ They followed a strategic plan and checked in regularly. In one year, their credit score jumped over 100 points, and they were able to qualify for a mortgage with a much better interest rate than they ever expected.

This client didn’t just buy a home; they gained financial confidence and control over their future.

Owning a home isn’t just about financial security—it’s about life stability. Research has shown that homeownership impacts every aspect of life, from mental well-being to long-term wealth-building.

• Here’s what the data shows:
  🏡 Homeowners build more wealth—on average, they are 89 times wealthier than renters.
  📚 Homeowners’ children perform better in school compared to their peers in rental situations.
  ❤️ Marriages last longer among homeowners than among renters.
  🩺 Homeowners tend to be healthier and live longer than those who rent.

Why? Stability.

When you own a home, you control your environment. You’re not at the mercy of a landlord who might decide to sell the property or raise your rent. Your home is yours to decorate, renovate, and grow into—a place that provides both an emotional and financial foundation. That’s why so many families mark their children's heights on a doorframe—it’s a tangible reminder that a home isn’t just a structure, but a space where life unfolds and memories take root.

Even after working to improve financial health, some common mistakes can derail a home purchase. Kirk highlighted some of the biggest errors buyers make—and the simple fixes that could save thousands of dollars (or even their mortgage approval).

1. Relying on Online Credit Scores

Many buyers trust sites like Credit Karma or their bank’s credit score to gauge whether they qualify. However, these scores aren’t the same as the ones lenders use. Mortgage lenders pull deeper credit data that online scores don’t always reflect.

2. Making Big Purchases Before Closing

One of the biggest homebuying mistakes? Spending money too soon.

Susie shared a story about a buyer who excitedly bought a designer handbag on a new store credit card—a “celebratory” purchase for her soon-to-be new home. Unfortunately, the new debt caused her debt-to-income ratio to spike, and her mortgage was denied at the last minute.

💡 Lesson learned: Do NOT open new credit cards or make large purchases before closing—lenders often check credit again before finalizing a loan! If you absolutely need to purchase something please run it by your lender first. 

3. Family Help with the Down Payment

Many buyers receive down payment help from family, but if those funds aren’t properly documented, it can create mortgage delays.

Lenders need to verify the source of the money to prevent fraud. So, if a family member is gifting money for a home purchase, work with your lender to document it correctly—no unexplained deposits from “under the mattress.”

One of Kirk’s most eye-opening insights? There’s a difference between spending less and actually saving.

“Not spending money isn’t the same as saving money,” he explains. “You think you’re saving, but unless you physically move that money into a savings or investment account, it just disappears into daily expenses.”

He told a story about how he would cut his own hair when he was younger, and that at the time he started doing this haircuts were about $19. So evertime he cut his hair he said I am saving $19, however he never moved the $19 into an account to actually save the money. 

As self-employed real estate agents, Don and I don’t receive a steady paycheck. Our income comes when we close a sale—some of you are paid the same. Early on, we had to develop a financial system that allowed us to stay afloat, no matter how unpredictable our income was.

Our solution? We committed to putting a fixed percentage of every paycheck into an account we couldn’t easily access. The idea was simple—if the money was hard to reach, we’d get more creative and resourceful with what we had available.

At first, the percentage we saved was small because we weren’t making much. But as our income grew, and we even picked up side jobs to make ends meet, we gradually increased the percentage without sacrificing our lifestyle. This strategy gave us a financial cushion during lean months and the ability to make smarter decisions with our money.

Not spending money and saving money are not the same thing. Avoiding unnecessary purchases can help in the short term, but real financial security comes from intentionally setting aside money before you even have a chance to spend it. The same principle applies to buying a home—knowing your credit score, planning ahead, and taking proactive steps will always put you in a stronger position.

For those preparing for homeownership, the best habit to develop is automating savings—transferring a set amount into a dedicated home-buying account every month. This way the money disappears before you even get your hands on it.

Buying a home isn’t just about credit scores and interest rates—it’s about making informed decisions that lead to:
✔ Financial stability
✔ Personal happiness
✔ Long-term security

If you’re unsure where you stand or what your next steps should be, let’s talk. We can help you build a roadmap to homeownership—whether you’re ready today or preparing for the future.

👉 Need expert advice? Contact us at rethinkingre.com or call 253-987-6789.
📞 Looking for mortgage guidance? Reach out to Kirk Rau at CrossCountry Mortgage at 253-376-5475.

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