What Can Disqualify You From Getting an MLO License?

If you’re considering a career as a Mortgage Loan Originator (MLO), you’ll need to obtain a license through the NMLS (Nationwide Multistate Licensing System). But not everyone who applies gets approved.

So, what can disqualify you from getting an MLO license? Here’s what you need to know before investing your time and money into the process.

The most common reason for disqualification is having a criminal history involving financial dishonesty or fraud.

According to NMLS Guidelines:

Felony convictions for fraud, theft, embezzlement, money laundering, or similar financial crimes permanently disqualify you.
Any felony (not just financial crimes) within the last 7 years can also disqualify you.

If you have minor misdemeanors or older felonies, you may still qualify, but NMLS will review them on a case-by-case basis.

→ Read more: What is the NMLS license?

2. Recent Bankruptcy or Significant Financial Issues

While having a bankruptcy doesn’t automatically disqualify you, unresolved or recent financial problems can be a red flag.

Outstanding tax liens, unpaid judgments, or delinquent debts may cause delays or denials.
Multiple bankruptcies or foreclosures in recent years could raise concerns about financial responsibility.

The NMLS expects MLOs to demonstrate financial stability since you’ll be advising clients on large financial decisions.

3. False or Misleading Information on Your Application

Providing incorrect or misleading information on your MLO license application is an immediate disqualifier.

Common Mistakes That Lead to Denial:

Omitting previous names or aliases.
Failing to disclose criminal history or financial judgments.
Providing incorrect employment or education details.

4. Failure to Meet Education and Testing Requirements

To qualify for an MLO license, you must:

Complete 20 hours of NMLS-approved pre-licensing education.
Pass the SAFE MLO Exam.
Submit fingerprints for a federal background check.

Failing to meet these requirements—or cheating during the exam—will result in disqualification.

5. State-Specific Disqualifications

Each state has its own licensing authority and may impose stricter requirements.

For example:

California DFPI may deny applicants with unresolved civil judgments.
The Texas Department of Savings and Mortgage Lending may review recent credit history more strictly.

Always check your state’s specific guidelines through the NMLS Resource Center.

Can You Ever Reapply If You’re Denied?

If denial is due to missing documents or education requirements, you can reapply after correcting the issue.
If denial is due to felony financial crimes, the disqualification is permanent.
For financial responsibility issues, you can reapply after resolving debts or judgments.

Tips to Avoid Disqualification

Check your credit report before applying and resolve any outstanding debts.
Be completely honest on your application; disclose everything.
Take your pre-licensing education and SAFE exam seriously—passing on the first try saves time and money.

Why Many New MLOs Start Their Career With Loan Factory

Once you’re licensed, choosing the right company can make or break your success. At Loan Factory, new MLOs get:

FREE Training & Mentorship – Weekly sessions with Thuan Nguyen, #1 Loan Officer in the U.S.
Cutting-Edge Technology – Pricing engine, CRM, and marketing tools included.
High Commission Payouts – Keep 100% commission minus a flat $595 per file.
No Monthly Fees – Save up to $1,000/month in software subscriptions.

Thuan Nguyen shared:
“Passing the exam is just the first step. The right system and mentorship are what help you grow and close more loans.”

If you meet all requirements and maintain financial responsibility, becoming an MLO can be a rewarding and high-income career—especially with the right support system.

Ready to Start Your MLO Career? Join Loan Factory Today – Learn from top producers, get free marketing tools, and grow faster as a new loan officer. Call 714-591-8143 to speak with our team.