Please Explain in One Sentence What Makes you a Good Credit Risk for this Loan?

Lenders often allow you a chance to qualify for a loan with this simple question: “Please explain in one sentence what makes you a good credit risk for this loan.” If you respond incorrectly, you could ruin your chances.

What Lenders are Looking For

Lenders are looking for signs of responsibility and financial strength. Here are some potential ways to convey your creditworthiness to a potential lender:

  • I recognize my need for more reliable transportation.
  • I have steadily improved my credit rating by making on-time payments and paying off debt.
  • I have been steadily employed for the past 5 years.

Warning Signs

Just as lenders are looking for appropriate reasons to grant you credit, they are also looking for reasons to deny your loan. You may want to avoid using responses similar to these:

To qualify for a loan, you typically need to convey to your lender two facts. First, you need to convince them that they can reasonably expect you to repay the loan as agreed. Second, you will need to show that you are making a good choice by requesting the loan for a valid purpose.

Of course, the above truths do not apply to predatory products like payday loans and other high cost short-term loans. Title loans also can be exempted from the above, since these predatory lenders expect for you to default and lose your collateral.

If you think you need a loan due to one of the warning signs above, then understand that you do not need a loan, nor can you be expected to be able to afford the loan. Instead, you might want to consider seeking help from a credit counseling or social services agency.

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