Tell me about credit underwriting

Question

Accepted Answer

Credit underwriting involves assessing the creditworthiness of borrowers to determine their ability to repay loans.

Credit underwriting is the process of evaluating the financial information of borrowers to determine their creditworthiness.
It involves analyzing factors such as income, credit history, debt-to-income ratio, and collateral.
The goal of credit underwriting is to assess the risk associated with lending money and make informed decisions.
Underwriters use various tools and techniques, including credit reports, financial statements, and risk models.
Based on the analysis, underwriters determine the loan amount, interest rate, and repayment terms.
For example, a credit manager may review an applicant's income, employment history, and credit score to assess their ability to repay a mortgage.
Credit underwriting is crucial in minimizing the risk of default and ensuring the profitability of lending institutions.

Accepted Answer

Underwriting is the process by which the lender decides whether an applicant is creditworthy and should receive a loan. An effective underwriting and loan approval process is a key predecessor to favorable portfolio quality, and a main task of the function is to avoid as many undue risks as possible.

Tell me about credit underwriting

Popular interview questions of Credit Manager

Top HR questions asked in Varthana Credit Manager