Absolutely, if you say someone's good for a loan and they end up not paying it back, that makes YOU look bad. Your name and reputation are on the line. It's like you promised everyone "Trust me on this dude" and then dude flakes out and leaves you high and dry. Not a good look.
Are you sure? I'm not, @OP is one of among users that has a privilege.
I'm not sure I understand what you mean?
Like I said, if you're going to vouch for someone, then your reputation is on the line if he defaults on a loan. You don't agree?