Question

if denied a loan, which of the following changes to your application process will not increase your chances of approval when you re-apply?
a. apply for a larger loan amount.
b. increase your gross monthly income.
c. have a cosigner apply for the loan with you.
d. eliminate some of your debt before you re-apply.

Explanation:

Analyze the impact of each option on loan approval

• Option a: Applying for a larger loan amount increases the lender's risk and the borrower's debt-to-income ratio, which decreases the chances of approval.
• Option b: Increasing gross monthly income lowers the debt-to-income ratio, which increases the chances of approval.
• Option c: Having a cosigner with good credit and income reduces the lender's risk, which increases the chances of approval.
• Option d: Eliminating existing debt lowers the debt-to-income ratio, which increases the chances of approval.

Identify the change that does not increase approval chances

• Since options b, c, and d all improve the application profile and increase the chances of approval, option a is the only change that will not increase (and will likely decrease) the chances of approval.

Answer:

• a. Apply for a larger loan amount. (Correct answer)
• b. Increase your gross monthly income.
• c. Have a cosigner apply for the loan with you.
• d. Eliminate some of your debt before you re-apply.