Credit underwriting
Also known as: Credit analysis · Credit decisioning · Loan underwriting
Assessing a person's or company's ability and willingness to repay, done before extending credit and setting its price and terms.
At Zarv
Portfolio NPL down 24% in 18 months with behavioral signal at origination.
Underwriting answers two questions that are routinely confused: can they pay (income, debt-to-income, collateral) and will they pay (history, behavior, stability). The first is measured with documents; the second is where most delinquency is decided.
In the US the process runs inside the Equal Credit Opportunity Act and Regulation B. A creditor may not discriminate on a prohibited basis — race, color, religion, national origin, sex, marital status, age, receipt of public assistance — and must notify the applicant of its decision within 30 days of a completed application. A decline carries a statement of the specific reasons, and "did not reach our qualifying score" is not one.
The bureau file works for people with a history and fails precisely for those without one. Adding behavioral signal to the bureau approves people the bureau cannot see and separates, within the same band, those who really carry high risk. In portfolios Zarv measured, that cut NPL by 24% in 18 months.
Frequently asked questions
What is credit underwriting?
It is the lender's assessment, before lending, of an applicant's ability and willingness to repay. It decides whether credit is granted, how much, with what collateral and at what rate.
How long does a lender have to tell me if I was denied?
Under Regulation B, a creditor must notify the applicant of approval, counteroffer or adverse action within 30 days after receiving a completed application, and a denial must include the specific reasons or explain how to request them.