The history of underwriting and its present problems

The basics of underwriting

Originally published for Affirm The word underwriting came from the simple act of writing your name under the amount agreed you wanted to borrow. Today, it has evolved into a complicated process of credit checks and income verifications, one that few people understand. Modern underwriting determines if a loan applicant is creditworthy and deserving of approval. They are usually done by investment banks, insurance companies, or other third-party financial institutions. These entities review the application, either manually or with an automated system, and make the final judgment call on whether to approve the applicant for the loan.

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