Which ONE of these word choices in a loan application tip off banks that you may be a credit risk? 1) One year 2) Thank you 3) Promotion

Jan 11, 2018
Question of the Day, Credit Cards, Mortgages, Research

Answer: Thank you

Fascinating research findings from Columbia Business School found that loan applications can tell quite a bit about a loan applicant [hat tip to Daniel Pink whose podcast had passing reference to this research]. Here's why word choice matters:

“When it comes to applying for a loan, everyone has a ‘tell,’” said Netzer. “Our findings suggest that similar to body language effects, people leave traces of their intentions, their financial and emotional states, as well as their personality traits in what we term the ‘involuntary sweat in the words.’”

As for key words, here's what they found:

The paper, When Words Sweat: Identifying Signals in the Text Loan Applications, determines that loan defaulters are more likely to exhibit the writing styles of extroverts and liars.  Specifically, a borrower was more likely to default if the following criteria were present on their applications:

  • They avoid mentions of themselves;
  • They use short-term focused words such as a “day” or “week”;
  • They mention financial and general hardship (e.g. bankruptcy, child support, divorce);
  • They tend to use more explanation words such “explain,” “why,” “because”;
  • They adopt appreciative and good-mannered words like “God bless” and “thank you”; or,
  • They reference other sources of inspiration such as God, family members, and chance

Conversely, borrowers who use achievement words such as “promotion” or “graduation,” demonstrated through their word usage high degree of financial literacy, or who used long-term focused words such as “one year,” were associated with positive loan repayment. 


  1. Why do you think "thank you" is a "tell" in indicating to banks that you might be a bad credit risk?
  2. What types of words would indicate a "high degree of financial literacy?"
  3.  What significance do you think a word like "because" has in a loan application that might worry a lender? 

Here's the ready-to-go slides for this Question of the Day that you can use in your classroom.


Let your students practice filling out a loan application using this NGPF Interactive: Applying for A Loan


About the Author

Tim Ranzetta

Tim's saving habits started at seven when a neighbor with a broken hip gave him a dog walking job. Her recovery, which took almost a year, resulted in Tim getting to know the bank tellers quite well (and accumulating a savings account balance of over $300!). His recent entrepreneurial adventures have included driving a shredding truck, analyzing executive compensation packages for Fortune 500 companies and helping families make better college financing decisions. After volunteering in 2010 to create and teach a personal finance program at Eastside College Prep in East Palo Alto, Tim saw firsthand the impact of an engaging and activity-based curriculum, which inspired him to start a new non-profit, Next Gen Personal Finance.