Credit Underwriter Interview Questions and Answers

Calculating rates involves assessing risk factors, while CAM and CIBIL reports help evaluate creditworthiness and customer details.

• Rate Calculation: Rates are calculated based on risk assessment, credit history, and market conditions. For example, a borrower with a high credit score may receive a lower interest rate.

• CAM (Credit Approval Matrix): CAM is a tool used to determine the eligibility of a borrower based on predefined criteria such as income, credit score, and loan am...read more

Rental income is calculated by multiplying the monthly rent by 12 months.

• Multiply monthly rent by 12 to get annual rental income

• Include any additional income from parking or laundry facilities

• Subtract any expenses such as property taxes or maintenance costs

• Net rental income is used to determine creditworthiness

LTV stands for Loan-to-Value ratio, which is a financial term used by lenders to assess the risk of a loan. Residual income is the amount of income that remains after all debts and expenses have been paid.

• LTV is calculated by dividing the loan amount by the appraised value of the property

• A lower LTV ratio indicates a lower risk for the lender

• Residual income is the income that an individual has left over after paying all debts and expenses

• Lenders may consider residual income w...read more

Financial ratios are used to evaluate a company's financial performance and health.

• Liquidity ratios: measure a company's ability to meet short-term obligations

• Profitability ratios: measure a company's ability to generate profits

• Solvency ratios: measure a company's ability to meet long-term obligations

• Efficiency ratios: measure a company's ability to use its assets and resources efficiently

• Examples of ratios include current ratio, debt-to-equity ratio, return on equity, and in...read more

FOIR stands for Fixed Obligation to Income Ratio and INIR stands for Internal Rate of Return.

• FOIR is a ratio used by lenders to assess a borrower's repayment capacity based on their fixed obligations compared to their income.

• INIR is a financial metric used to calculate the profitability of an investment over time.

• FOIR is commonly used in the credit underwriting process to determine a borrower's eligibility for a loan.

• INIR is used by investors to evaluate the potential return ...read more

Cash-burning concept refers to a business model that spends more money than it earns.

• It is a common strategy for startups to gain market share quickly.

• It can be risky if the company cannot secure additional funding.

• Examples include Uber, which spent billions on expansion and marketing before turning a profit.

• Credit underwriters need to assess the financial health and sustainability of companies with this model.