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Loan applications

Loan Applications:
Why You Should Never Lie

In this day and age, very few people go through adult life without having to complete various types of loan applications. You may need home loans, car loans, student loans, or business loans, just to name a few examples.

Having a clean credit history is essential in securing a loan from banks, financial institutions of any kind, or other loan providers. Without good credit, it can be extremely problematic for you to gain access to the necessities and conveniences of modern life such as a car, credit cards, furniture, and holidays. More significantly, an impaired credit history may affect your chances of securing a mortgage which may mean you could be denied the right to buy your own home.

Always fill out any loan applications truthfully and to the best of your ability. Do not be tempted to tell lies on your loan applications. Be upfront and honest about every detail including your total income. Tell your lender if:

  • You have current arrears on your mortgage

  • If you have a bad credit history

  • If you are self-employed or retired

Many lenders are forced to turn you down if they find that you have presented something incorrectly. Therefore, it is crucial that you never lie on a loan application form.

Why is it important to tell the truth on loan applications?

It is necessary to come clean when applying for any sort of loans because loan providers carry out thorough and stringent checks before they approve any loan application. The credit checking systems in place are so sophisticated, that chances are, you will be found out if you lie on your loan application.

  • Furthermore, any inaccuracies exposed on your loan application are essentially a crime as they amount to a fraudulent application.

  • It is not worth the risk, as even a minor inaccuracy could cause you difficulties in future applications for credit.

How to avoid having to lie on a loan application

Instead of resorting to lying on your loan application, it is better to think about how you can improve your credit record in general.

  • Check your credit report: It is easy to check your credit report using one of the online credit monitoring services.

  • Set the record straight: If you spot anything on your credit report that needs updating or is inaccurate, immediately ask the credit reference agency to investigate and amend the record accordingly.

  • Protect your identity: Be aware that identity theft is one of the fastest-growing crimes in the US. If you notice unusual activity on your credit report, such as a loan application or credit card application you did not make, you could be a victim of identity fraud. Report this urgently and make sure the incorrect information does not stay on your personal record.

  • Clear your debts: Pay your existing monthly credit card bills and loan repayments promptly. Being responsible about your debts will indicate to potential lenders that you are skilled at managing your budget and are not a risk. If at all possible, pay off any outstanding amounts on credit card accounts in full. If you are having difficulties, discuss this openly with your lender and agree a schedule of payments you can afford.

  • Avoid credit repair companies: Be aware that these are not credit reference agencies. They do not have the authority to amend or improve your credit report. Do not be fooled into paying for costly services that will not ultimately help you.

  • Know your credit score: You can order your credit score which will give you a good idea of how healthy your credit report will appear to potential lenders. This is especially useful before you make any new loan application.

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