5 Forbidden Phrases in the Lending Industry
At some point in your life, unless you're independently wealthy, you will be forced to approach a loan officer or mortgage broker at your local bank. As employers continue to layoff and foreclosure rates continue to rise, many banks are increasing their minimum acceptable credit score to 740. Anything below that will require a significant down payment and include steep interest rates. While a poor credit score can bar you from a mortgage, auto or personal loan, there are five phrases which may seem harmless but are considered red flags in the financial industry and can lead to a denial rather than an approval.
This article applies to everyone, regardless of age, sex, and race. Even if you are 50 years old with excellent credit, there are a few phrases you should never let slip when applying for a loan:
“I'm Desperate"
The application process for a loan takes time and is a process which cannot be expedited. Telling a loan officer that you are desperate or need to secure a loan quickly is a giant red flag. Emergencies arise in life, but if you are in desperate need of cash the lender will definitely wonder what has lead to your urgent situation. When you approach a lender, be honest and tell them why you need a loan, your current financial situation, and what has brought you into their office.
“I'm Unemployed"
A loan requires monthly or bi-weekly payments to repay the lender. If you are unemployed or have recently received notice of a layoff, the lender will wonder how you intend to repay the loan. Even with an impressive credit score unemployment is a guaranteed no. Banks only consider facts when determining a loan and look at your current income, not the future. If you feel you may be laid off in the near future but have not received notice from your employer, use your current income information and don't tell the lender that you may be laid off.
“I'm an Entrepreneur”
Banks generally welcome business owners with a firm handshake and dollar sign driven smile. Being an entrepreneur receives an entirely different reaction. If you are planning to start a business or your existing business is not yet established within the community, lenders will see you as a credit risk. Not only are you funding the business with your personal assets, limiting the funds you have available to repay a loan, but they also view you as having little business experience. Remaining employed while you start your business venture is your key to receiving a loan.
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