One reason lenders usually require a lot of information from loan applicants is to avoid:

Name: One reason lenders usually require a lot of information from loan applicants is to avoid:
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The problem of adverse selection occurs when loan applicants with a high risk of default are more likely to apply for loans than those with a lower risk. Lenders need a lot of information from loan applicants in order to determine their creditworthiness and avoid the negative effects of adverse selection.

One Reason Lenders Usually Require a Lot of Information from Loan