It’s a common scenario: You apply for a personal loan or credit card and get denied. The reason seems shrouded in mystery, and you receive a letter with language such as “lack of recent installment loan information” or “proportion of balances to credit limits.” Find out what these reason codes actually mean and what to do about them below.
Not having a real estate secured loan like a mortgage can negatively impact your credit score and lead to credit denials. This article explains what the reason code “lack of real estate secured loan information” means and what you can do about it.
What Does “Lack of Real Estate Secured Loan Information” Mean?
When you apply for credit like a credit card or personal loan, lenders and credit scoring models look for certain factors to determine your creditworthiness. One factor is your credit mix – having different types of credit accounts like installment loans and revolving credit cards.
Lenders particularly like to see a real estate secured loan like a mortgage in your credit mix These types of loans require a big commitment, so having one shows you can responsibly manage that type of debt
If you don’t have a real estate secured loan reporting on your credit reports, you may get denied for credit with the reason code “lack of real estate secured loan information.” This simply means you don’t have a mortgage or similar loan in your credit history.
Why Is Lack of a Mortgage Viewed Negatively?
There are a few reasons lenders view the lack of a real estate secured loan negatively:
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It shows less commitment – Getting a mortgage takes more financial commitment than getting a credit card or personal loan Not having one may signal you aren’t ready for that level of responsibility,
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You don’t have enough credit mix – Credit scoring models like to see you managing different types of credit smoothly. Not having installment loans like a mortgage can hurt your credit mix.
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You may be less financially stable – Owning a home often signals financial stability. Renters may be viewed as less stable.
However, the lack of a mortgage alone isn’t usually the only reason for a credit denial. It’s often weighed along with other factors like your income, assets, credit scores, and overall credit profile.
How to Offset Lack of Mortgage Information
If you want to improve your chances of approval, here are some steps you can take:
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Add yourself as an authorized user – Become an authorized user on a real estate secured loan of a family member or partner. This adds the positive history to your reports.
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Get a credit builder loan – Applying for a small installment loan you pay back over time can help demonstrate you can handle this type of credit.
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Ask for reconsideration – If your credit profile is otherwise strong, call the lender and explain why you should be approved despite no mortgage. Provide documentation of your income, assets, and responsibility.
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Improve your credit – In general, having excellent credit scores and history makes lack of a mortgage less important. Keep all accounts in good standing and let them age.
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Wait and reapply – If you can’t offset it now, wait 6-12 months and let your credit profile further develop, then reapply.
When Lack of Mortgage Won’t Matter
In some cases, not having a mortgage won’t negatively impact your application:
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When applying for credit cards – Credit card issuers care more about how you handled existing revolving credit.
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With excellent credit scores – Applicants with scores above 740 will often get approved regardless.
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If you have other significant loans – Auto loans, student loans, and personal loans may demonstrate your creditworthiness.
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For small loans – For loans under $5,000, mortgage information often matters less.
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With low mortgage balances – Even if you have a mortgage, low balances may not help much.
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For mortgages – Obviously lenders know you don’t have a mortgage yet when applying for your first one.
So while lack of mortgage can cause denials in some cases, it’s not universally negative. Look at your entire application and credit profile to determine if it’s impacting you.
Tips for Handling Denials for Lack of Mortgage
Here are some final tips if you get denied credit for lack of real estate secured loan information:
- Review your full credit reports for inaccuracies before reapplying.
- Write a letter to reconsideration explaining any special circumstances.
- Be patient and let your credit history further develop.
- Apply again with a different lender who may weigh factors differently.
- Consider adding an authorized user mortgage trade line if possible.
- Apply for a secured installment loan to add credit mix.
With some persistence and continued responsible credit management, you can overcome the lack of a mortgage on your reports. Monitor your credit and make a plan to continue strengthening your profile over time.
8 Common Reason Codes and Positive Actions You Can Take in Response to Each
The reason codes listed on your adverse action notice might be difficult to decipher. Don’t worry, we’ve got you covered with some explanations below. There are a lot of reason codes, so we’ve picked some of the most common ones to cover here.
One thing to note is that these aren’t just reasons you might have been denied for credit. They’re also things that can negatively impact your credit score. Addressing them could help positively impact your score while making it potentially more likely you’ll get approved for credit in the future.
Lack of recent installment loan information/insufficient installment loan information
This code means you don’t have any installment loans in your credit history or you haven’t had one active in a while. Creditors like to see that you can handle a mix of revolving and installment loan accounts, and a good credit mix can actually help improve your score.
What you can do: Apply for a small personal loan or a credit builder loan and pay it off as agreed. This helps add credit mix to your history.
>> Read our review of the Self Credit Builder Account
What NOT to tell your LENDER when applying for a MORTGAGE LOAN
What is a secured loan?
Learn more about it. A secured loan is a type of loan that is backed by collateral, something valuable that improves your standing with a lender. Home mortgages and auto loans are two common types of these kinds of loans—the collateral being your home or car.
What happens if you don’t have a real estate secured loan?
Lack of real estate secured loan information This means you don’t have a loan that’s secured by real estate—aka, a mortgage. This one typically doesn’t come up when you’re applying for a mortgage, but other lenders might see it as a barrier. What you can do: This isn’t really one you want to solve just to get other credit.
What is an unsecured loan example?
An unsecured loan is a loan that doesn’t require collateral to get. This is different from a secured loan, like a mortgage or a car, where the lender can repossess the asset if you fail to repay the loan. Examples of unsecured loans include most personal loans, unsecured credit cards, and student loans. Collateral required? Credit check?
Can a derogatory credit score cause a loan denial?
They also give lenders a reason to believe you’re not a reliable borrower, so these derogatory marks—especially the more recent ones—can lead to denials. What you can do: Review your credit reports to ensure all the information is actually accurate.