Words That Sweat

Here are the words to avoid when applying for your next loan.

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As the world continues to deal with the economic consequences of this pandemic, governments are offering zero-interest loans to individuals and small businesses. If you’re in need of a loan in Canada, there are helpful resources here, here, and here. But before you apply, check your words! Because, mentioning family, religion, or your future could cost you.

A recent study called, wait for it, “When Words Sweat”, examined the text of loan applications that ended in default. Turns out, they had a lot in common.

Sifting through 120,000 loan applications from the online crowdfunding platform Prosper, researchers found that  “defaulters used simple but wordier language, wrote about hardship, explained their situation and why they need the loan, and tended to refer to other sources such as their family, God, and chance.”

The safer bets, on the other hand, didn’t sound needy, hopeful, or dependent. 

If you had a loan application rejected, a bot likely did it

Though the researchers built their own machine learning tools to unearth these conclusions, banks, credit unions, and lenders are also using data like this. Credit scores are important, sure, but when it comes to applications, there’s time spent reading between the lines.

Did you mention your divorce? Did you say please? Did you insist that you have a good work ethic? All of these “sweaty words” correlate with a higher default rate.

The bottom line: Money talks. It has its own language, and it pays to get fluent.