When you apply for a loan, there are standard questions that are asked of you by any lender. One of these questions, whether asked in person or on the loan application, is to name contact and bank account information. To some borrowers, they see no problem with giving this information away. For others, they have a difficult time as they feel the information is personal and there is no need to provide it. However, it is important for lenders to be up to date on your information, especially when it comes to bank and contact details.
There are several reasons this info is critical and can even affect your chance of being accepted for a loan. Here are a few of them:
Lenders want to know you
Financial lenders are in the business to help you attain the funds you need, whether for a personal loan or a mortgage. However, lenders aren’t in the habit of lending to anyone and everyone who applies. By providing contact and bank info, you are not only validating identity, but also demonstrating good faith.
Providing this information demonstrates to a lender that all cards are on the table, and that you are serious about the loan application. You are not trying to hide anything and have trusted the lender with this information. It’s the first step in building a foundation of trust, which is necessary when accepting a loan.
History can play a role
If you have moved many times, it wouldn’t be a big deal to a lender. However, if you have moved houses repeatedly due to the inability to keep a job and each home is progressively becoming worth less and your bank account can’t keep up either, this could be a red flag for a lender.
According to relator.com, lenders value stability.1 They want to see that you have your ducks in a row regarding your life in general. If you are able to keep a job and make house payments on time, which include utility bills and other affiliated credit obligations, then a lender is more likely to grant approval of the loan.
This isn’t to say that you cannot receive approval if you have poor credit or a less than satisfactory job history. It’s up to a lender to decide whether or not to provide a loan for you. But by providing all the requested information, you can only help their cause, and better earn trust.
Bank information may be a factor
When you take out a loan, you are going to have to make payments to pay it back. A lender wants to ensure that repayment will be coming. By validating a live checking account and viewing payment history, a lender has a better gauge of your financial situation.
Likewise, a popular option for you could be to set up direct payments so you can pay your loan off without needing to think about it every month. If the bank information on file with the lender is different than that of the bank, those payments might not go through. While updating the information is not difficult, it could take some time before the new information goes into effect, which could mean a late payment and additional interest.
If you move, whether it is across town or to a new state, or switch a bank for any reason, then a lender needs to be aware of the switch. While it may not seem like a big issue to you, and you might think a lender has other things to worry about, making sure everyone is on the same page when it comes to handling a loan is absolutely crucial. You need to always be on the same page with your lender so neither of you wind up in a situation you didn’t intend.
For more information about why this personal information is necessary, the loan approval process or any other information pertaining to applying for loans, visit the Cash Central Resource Center.
The views expressed by the articles and sites linked in this post do not necessarily reflect the opinions and policies of Cash Central or Community Choice Financial®.
1Donofrio, Craig. (2014, Sept 25). Retrieved from: https://www.realtor.com/advice/finance/8-mortgage-mistakes/