"I just helped a couple who needed to improve their score," he says. "And all they had to do was pay off some credit cards. That bumped up their scores by 30 points."
It can take 30 to 90 days for payments or other credit activities to reflect on a borrower's credit history. But lenders and mortgage brokers can use an expedited reporting system, known as rapid rescore, to get a new score within a couple of days after the changes are made. Not all lenders are willing to obtain rapid rescores.
The expedited scoring system may be a quick solution for borrowers who are turned down because of high debt-to-income ratios, which is a formula used to compare monthly payment obligations versus income.
"Sometimes you just need to pay off some debt," says Juan Rodriguez, a residential banker with Baytree National Bank & Trust in Chicago.
If your DTI is slightly above a lender's limit, it might be worth trying a lender who allows for higher debt-to-income ratios, Auerbach says. Most lenders follow Fannie Mae and Freddie Mac guidelines, but some have additional layers and more stringent requirements in place.
"Fannie Mae sets a 45 percent debt-to-income ratio (limit), but maybe that particular bank has a 38 percent" limit, he says. "That's why it's important to know your lender requirements. Know why you were denied."
Smaller lender could help
When trying a different lender, keep in mind community banks tend to have more flexible underwriting standards, says Rodriguez.
"If your situation requires an exception, for example say you are self-employed, a community bank offers some flexibility for self-employed individuals," he says.
Sometimes you just have to wait
But if you are deeply indebted or have too many credit problems, regardless of how many lenders you try, you might not succeed at obtaining a mortgage approval.
In that case, "get your finances in order first" Conarchy says. "That's especially the case if you are buying a home."