Lenders have to be assured that prospective borrowers have the ability to perform well enough to generate profits to repay their financing. They will ensure that the borrower has a vested interest in the operation with their own money, and that there is always a secondary source of repayment from which they can ultimately get out of a deal.
But no matter how well these factors add up, if the lender cannot get comfortable assessing the borrower’s intention to repay the loan, their commitment to honoring their promises, or their basic integrity, that lender will pass on the deal.
Character sometimes has to be adjudged with factors beyond a credit report, lack of a criminal record, and a good loan application. The lender has to spend the time listening, watching, and gathering impressions about how this applicant will operate under pressure. How strong will the borrower’s intentions remain if things don’t go well for the business? Will they work hard to settle their obligations, or throw in the towel and walk away?
Character is the most important factor in a credit decision and can never definitively defined or described until after the credit relationship is over.