3 Things Underwriters Look for in a Loan Application

November 30, 2017by Sarah Green0

The loan underwriting is a process undertaken in order to analyze the data provided by the loan applicants. In addition, the credit score is being reviewed prior to the assessment – whether a certain applicant meets the minimum criteria for a loan or not. As a part of the loan underwriting process, all of the data is analyzed, verified and then summarized so the lenders can figure out the status of the applicant.

So, here are the three things that underwriters should look for  when applying for a loan:

Get to Know the Applicant’s Personal Status

It is important to understand the borrower’s personal information before giving them a chance to acquire the loan approval. By knowing who they are and what they do, you can definitely assess the right move for them.

The underwriters will thoroughly review the applicants, including their credit score, monthly gross revenue, and other related matters. Other key characteristics to be considered will be the applicant’s age, residential status, employment status, loan purpose, loan amount, and the numbers of earners in the house.

All of these will help the underwriters analyze and summarize the personal data of the borrower. This will help both parties make the process fast and easy with the proper cooperation.

Get to Know the Applicant’s Bank Statements

The underwriters need to review the applicant’s bank statements. The underwriters need to ask for recent bank statement copies of the borrower at the time of the underwriting process. This will help the underwriters understand how the borrowers manage their money. Also, the bank statements should not be overlooked, as it confirms the following data:

  • Applicant’s real full name and address
  • Applicant’s salary credits (to see if they are on a regular amount and on a regular basis)
  • History of the general transactions (whether they are on a regular payment made to the credit agreement)
  • To see if there are any unpaid or a reserved transaction
  • Use of an unauthorized credit limit

All of this data on the applicant’s bank statements has the impact on the loan, so this should be taken into account, as well.

Applicant Credit Search

The underwriters must use an electronic identification process by effectively connecting with the reference agencies so the identities of the borrowers will be identified. The underwriters need to compare the key credit score and information of the borrowers such as credit cards, mortgage, loans, as well as bank statement status towards the disclosed data in the application.

Aside from these three essential aspects, the lending company should also take a look at the potential financial frauds to avoid issues along the way.

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