Why has my loan application gone to underwriters?

If your loan application has gone to underwriters, don‘t worry. It’s a normal part of the lender’s approval process. Underwriting involves a risk assessment to check your creditworthiness and see if you can manage the loan you’re applying for.

It doesn’t mean something is wrong. In fact, it can be a good thing. It shows that your application is being taken seriously.

What is an underwriter and what do they do?

Underwriters review loan applications for lenders to see how risky it’d be to lend money. They assess if the loan meets the lender’s eligibility criteria and suits the borrower’s financial situation.

For example, when lenders run a hard check of your credit report when you apply, the underwriter may want to review your credit report in more detail. They’ll want to see how well you’ve managed debt in the past. This will help them make a decision on your application - and luckily it doesn’t involve a second credit check.

Once the underwriter has got all the details they need, they will decide whether to:

• approve the loan
• decline the loan
• or change the terms (for instance, the loan amount).

Do all loans go to underwriters?

No, not all loans go to the underwriters. Often lenders make automated decisions using algorithms. But if they can’t do this, then they will pass your application to an underwriter to manually check it.

Reasons your loan application is with underwriters

There are several reasons why your application may have been referred. The underwriter might need to:

• Review your application in more depth - to be able to reach a decision, especially if you are applying for a secured loan (or mortgage). This type of borrowing is tied to your property, so there is a risk to your home if you fall behind with your repayments.
• Ask for more information - to get a better picture of your financial circumstances and how well you manage money.
• Request documents – such as proof of identity, address or income.
• Clarify any mistakes – there might be a typo on your application form, like a misspelt name that doesn’t match the electoral register, for example.

Lenders want to make sure that you are who you say you are, and that repaying a loan is affordable and won’t put you into financial difficulty.

Plus, asking for more information gives you the chance to be accepted, instead of being automatically declined. It shows that lenders are seriously thinking about offering you a loan.

How long does underwriting take?

The time underwriting takes depends on the lender and the type of loan you apply for. If the underwriter needs more information, be ready to provide it quickly. The faster you respond, the sooner you should get a decision.

Underwriting is the final step in the loan approval process, so if you’ve been referred, then you know that a decision is close.

Read on to find out how long it takes for a personal loan to go through, from start to finish.