Underwriting
Underwriting is the lender's process of evaluating your loan application to decide whether to approve it and on what terms. It typically combines an automated risk model (which scores your file based on credit, income, and other factors) with manual review for edge cases. Underwriting determines your approval status, loan amount, APR, and term.
Underwriting is the part of lending that happens between application and approval. Most consumer loan underwriting is largely automated: a model scores your application based on dozens or hundreds of variables and produces an approval decision in seconds.
What underwriters look at
The standard underwriting factors:
- Credit profile: score, history, recent inquiries, account mix
- Income: stated and verified (through bank linking or pay stubs)
- Employment: stability and tenure
- Debt-to-income ratio: existing obligations relative to income
- Bank account behavior: overdrafts, NSF events, average balance
- State of residence: affects what’s legally available and at what rate
Subprime lenders weight bank account behavior and income more heavily than credit score. Prime lenders weight credit score more heavily than bank behavior.
Why your offer might not match what you requested
The underwriting model sizes the loan to the largest amount it thinks you’ll repay. If you ask for $3,000 but the model thinks your file supports $1,500, you’ll see a $1,500 offer. The lender wants to lend more (more principal = more revenue), but undersizing is a risk-management strategy.
This is why pre-qualification matters: you can see what underwriting will actually approve before the hard pull, instead of hoping the offer matches your request.