Yes, a bank can absolutely deny a $40,000 loan application. The decision to grant a loan is based on the bank's proprietary risk assessment models, which evaluate your credit history, debt-to-income (DTI) ratio, employment stability, and total assets. Even if you have a decent credit score, a $40,000 loan represents a significant amount of unsecured debt; if the bank determines that your current income cannot support the required monthly payments or if your existing debt levels are too high, they will deny the request. Lenders must adhere to the Equal Credit Opportunity Act, which requires them to provide a "Notice of Adverse Action" if you are denied. This notice must explain the specific reasons why the loan was refused, such as "insufficient income," "high credit utilization," or "short credit history," allowing you to understand the deficiencies and potentially work to correct them before reapplying.