A Good Candidate For A Loan

When folks ask to borrow money from you, can you tell in advance who you can probably count on to pay it back and who you can’t? Maybe you have a gut feeling; maybe, better, you have some experience to go on. According to Quartz, there’s now some Science to back up your instincts about who is a good bet — or, if you didn’t have any instincts about this to begin with, to substitute for them:

borrowers who try to appeal to their prospective lenders’ emotional side — by mentioning God, divorce, or the needs of family members, for example — are less likely to fulfill their loan obligations (something to keep in mind when our buddies or family members try to mooch off of us).

On the other hand, people who mention aspirations like graduate school or weddings are more likely to pay back their loans.

Quartz cautions that “The research is ongoing and hasn’t been published yet.” Still, the researchers have supposedly found that word choice matters a great deal:

The group found that analyzing the words used in the initial loan applications could improve the ability to predict loan defaults by 4% to 5.7% over traditionally used information like credit scores

So, what’s a good sign and what isn’t?

Quartz has put together a helpful chart of terms to pay attention to:

There is some definite class stuff going on here. It’s hurting my heart just to look at Column A; and, at the same time, I recognize a number of those words from emails I’ve seen in my spam folder. There’s also some stuff I don’t quite understand: “Mother”? What is that about?

More affluent and well-educated people seem more likely to me to use a construction like “after-tax,” and of course people who are better off to start with are going to be more likely to be able to pay off loans. That’s why banks are more responsive to them in the first place. Will studies like these only give lenders another reason to direct their efforts away from the less fortunate?

Maybe in our personal lives the answer is that, when people ask us for money using words from Column A, we should respond, if we’re able, with the understanding that we might not be able to be paid back. And if we ourselves want to secure a loan, we should definitely mention our “excellent credit,” rather than either God or our moms.

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