Want a Loan? Check the Mirror First

Before you visit the bank for a loan, you might want to consider getting a makeover first.

A new study from Rice University and the University of Washington finds that people's physical appearance can affect whether they are deemed trustworthy, which in turn affects their access to loans. The researchers used data from the peer-to-peer lending site Prosper.com, where borrowers share information on their credit history, education, and income, as well as photographs of themselves. Lenders examine those profiles and decide whether or not they are willing to make loans, and at what interest rate.

It turns out that not only did the lenders base their decisions partly on borrowers' looks, but also, people who look "trustworthy" turn out to be less likely to default on their loans. "This implies that the pictures revealed something about borrower creditworthiness that is not accounted for in traditional credit scoring models," says Jefferson Duarte, associate professor in real estate finance at Rice.

In other words, people who "look" trustworthy might actually be more trustworthy. What does it all mean? I know that I'll be paying attention to my looks more next time I go in to a car dealership or bank looking for a loan.

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