Loan reasons do they have any effect?

Davewils

Do banks score your loan application based on what options you choose?

Like when you apply for a loan it asks if the loan is for:

Debt Consolidation
Home Improvement
Holiday
etc

Why ask this question if it doesnt have some effect on the outcome and does anyone know how their ranked?

kje_2

I can't say for sure but it would make sense.

For example, borrowing money for a home improvement means that you're a homeowner and have something that, hopefully, will be worth more after the money has been spent so the lender knows that you have an asset than can be sold to pay off the debt even though the debt is unsecured. Plus, you're less likely to be disappearing.

Borrowing money for debt consolidation could be seen as more risky as the borrower could pay off their current debts but still rack up £1,000s in unsecured debt again on cards that they have paid off with the loan.

Asking for £10,000 to fund a backpacking tour might be treated with suspicion as the borrower would be out of the country and might not be coming back.

£10,000 unsecured to buy lottery tickets....

The lenders must have some way of looking at risk based on what the borrower says that you want your loan for.