Personal Loans

Why You Should Be Completely Truthful on Your Personal Loan Application

Giving false information on a loan application to boost your chances of getting approved causes more harm than good. Learn why and how to avoid this mistake.
A person types on a laptop while another one holds several papers. They are carefully applying for a loan online
Written by:
Kenya McCullum
Edited by:
Kristin Marino verified

You need a personal loan to deal with an emergency and you’re nervous that you may not be approved. You want to put your best foot forward, so maybe you decide to report making a higher income than you actually do, or not provide information about your current outstanding debts or bankruptcy.

You may think, “What’s the harm if I plan to pay the loan back? After all, it’s just a harmless fib, right?”


Lying on a personal loan application is not just a harmless, little thing and if you get caught, there can be serious repercussions.

On this page, we explore just how serious lying on a loan application can be, as well as what you can do to increase your chances of getting the best personal loan you can qualify for without any little white lies.

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What Questions Are You Asked On a Personal Loan Application?

When you apply for a personal loan, be prepared to answer several questions about your finances that lenders will use to make their decision. The following are some examples of the areas you will be expected to address.


Lenders may have minimum income requirements for personal loan applicants, so be sure to accurately list all of your income sources.

In some cases, banks will be upfront about what their income thresholds are, and in other cases, you won’t know that you missed the mark until a decision has been made.


Banks want to know that the people getting loans have stable employment, so you will get questions about where you currently work and how long you’ve been there, as well as your past jobs.

If you haven’t been at your job long, and you also have a spotty employment history, banks may take it as an indicator you won’t have consistent money coming in to pay your bills.

Other Debts

If you have current debts, banks will want to know what they are and your payment history. In addition to payments, lenders will use your debt-to-income ratio to evaluate how much of a risk you are.

Reason for the Loan

For the most part, banks will not reject a loan application based on what people want to do with the money, but they still want to know the purpose of the loan. Some banks only provide loans for specific reasons, and if they find out someone has lied about what the money was for, they may sue the borrower.

Loan Amount

Obviously, the bank needs to know how much you want to borrow, but it’s important to choose that amount wisely. The amount you ask for may determine your eligibility to receive the personal loan based on your income and credit history.

Compare personal loan rates, terms, and requirements from well-known lenders.

How Does the Lender Verify a Loan Application?

If you think a lie you tell on a personal loan application will go unnoticed, think again. Lenders can, and will, verify the information on your application in the following ways.

Phone Calls

If you claim to work for a certain company, you can be sure that banks will make a phone call to verify whether or not you actually work there and for how long.

Generally, lenders call the human resources department for this information, but sometimes they may even contact your direct supervisor.

Written Verification

If banks aren’t able to get information by phone, or they need to follow up on what they received, they may send letters or emails. When lenders do this, it can make the approval process longer.

Document Review

You will be asked to submit supporting documents with your personal loan application and they will be carefully reviewed by banks.

The documents lenders will look at include bank statements, pay stubs, credit reports, property deeds, and car titles.

In addition, lenders will review proof of address documents, such as a rental agreement or utility bill.

What Are Common Things People Falsify on Loan Documents?

People may be tempted to lie on personal loan documents, but they may not realize there are common lies that are well-known and lenders pay particular attention to that information.

Here are some of the common things people lie about on their loan applications:


People may lie about their income on loan documents in order to pretend they make more than they actually do, or to fabricate income when they have no money coming in. This may be done to get a loan approved or receive more money than they would normally qualify for. T

his falsehood is easily detected since lenders require applicants to submit proof of income.


Personal loan applicants tell this lie if they’re unemployed, or if they have a job and want to create the appearance that they earn more money than they do.

In some cases, an applicant may even go as far as to fabricate a business to create the appearance that they make more money.

Although people may submit fake documents to support their claims, lenders know exactly what to look for and can uncover the lie.


Banks will ask how much debt you have to determine whether or not you can afford to pay back a loan.

People may lie about how much money they actually owe, or lie about having debt entirely. In addition, some people may omit credit cards if they’re not currently using them.


Since one requirement for receiving a personal loan is being a resident of the United States, people may fabricate an address to meet this condition. Also, U.S. residents without stable housing may make up addresses to get their loans approved.


In some cases, people will lie about the purpose of a personal loan if they think the bank won’t approve of the reason they want the money or they know they’re not supposed to use it on what they want.

While the funds can be used for many different purposes, depending on what it’s for, banks may consider someone more of a risk.

What Happens When a Loan Application Is Flagged for False Claims?

No matter what the lie is or the reason for it, people do get caught falsifying information on a personal loan application, it’s fraud and there are consequences. The best case scenario is that a company will discover the lies before the loan is processed, and will just deny the application.

If loan application falsehoods are discovered after a borrower receives the money, the borrower may face grave legal trouble, as the lender can sue for fraud to recover the money. Although rare, a borrower could even face criminal charges for lying to get a loan.

Increase Your Chance of Being Approved Without Fudging the Truth

There’s no doubt that applying for a personal loan can be stressful, especially if you need the money right away. However, lying isn’t the answer, so instead, use the following tips to increase the chances of being approved.

Choose the best lender

Your road to personal loan approval begins with choosing the right lender for your needs. Check the websites of lenders you’re considering to ensure that you meet their eligibility requirements.

Don’t waste time filling out an application if you don’t have the minimum credit score or income they expect.

Check your credit report

Since lenders will rely on your credit report and credit score to make a decision, you want to know what information they’re using beforehand.

It’s not uncommon for credit bureaus to include bad information on a report, which can be anything from incorrect credit limits for cards to listing accounts that have already been closed as still being active.

Be sure to carefully review your credit reports from Equifax, TransUnion, and Experian to ensure there aren’t any mistakes, and if there are, have them corrected right away.

Review all of your documents

To increase your chances of being approved, you want to make sure that your application is accurate and complete, and that all of the information is up to date. If something’s missing or incorrect, it may cause the company to deny your loan.

Ask for the right amount

When you apply for a personal loan, it’s important to carefully decide how much you ask for.

If you request more money than you need, you may decrease your chances of approval because this can be a red flag of financial trouble.

In addition, the bigger the loan, the more risky approval becomes if banks feel your income won’t allow you to comfortably pay it off.

Get a co-signer

If you’re worried about being approved for a loan because you don’t have the best credit history, you can boost your chances by asking a trusted friend or family member with good credit to be a co-signer on your personal loan.

Since your co-signer would be equally responsible for the loan, this can help to alleviate any lender concerns about default.

Frequently Asked Questions

Can I get a personal loan with a 500 credit score?

Generally, the higher your credit score, the more likely you are to qualify for a personal loan. However, that doesn’t mean you don’t have any options.

Although a 500 credit score is in the poor range, there are some lenders that may work with you.

It’s important to keep in mind that your interest rates will be higher and you may be charged extra fees. In addition, you may be required to put up collateral to receive a loan.

Do I have to tell the lender what my personal loan is for?

Yes, however in most cases, a lender won’t deny someone a personal loan because of what they plan to use it for.

Personal loans can generally be taken out for a variety of purposes, from paying off credit cards to making repairs and improvements on a home to taking a vacation, but some lenders have restrictions on how the funds can be used.

Why would a lender reject a personal loan?

A bank may reject a personal loan for several different reasons, such as an applicant having a bad credit history, unstable or inadequate income, and too many existing debts.

Also, someone may be denied if they didn’t fill out their application properly or don’t meet the basic requirements, such as being at least 18 years old and a U.S. citizen or resident.