Lending and Underwriting

Ability to repay is the lender's judgment about whether the borrower can realistically handle the requested debt.

An adverse action notice is a notice explaining that a credit request was denied or approved on materially less favorable terms.

Approval odds are the estimated likelihood that a borrower may be approved for a credit product under current conditions.

Creditworthiness is a lender's overall judgment about how likely and able a borrower is to repay.

A debt service ratio is a lender's measure of how much income or cash flow is consumed by required debt payments.

Debt-to-income ratio compares recurring debt obligations to income to show how stretched a borrower's cash flow may be.

Income verification is the lender's process for confirming the borrower's earnings before approving or pricing credit.

Underwriting terms that explain how lenders judge capacity, risk, and approval strength in consumer-credit decisions.

A loan application is the formal request a borrower submits when asking a lender to extend credit.

Manual review is a human lender review of an application rather than a fully automated approval or denial.

Preapproval is a stronger early lender signal that a borrower appears to qualify, subject to final verification and conditions.

Prequalification is an early credit estimate suggesting that a borrower may fit a lender's basic criteria.

Risk-based pricing means the lender changes pricing terms based on how risky the borrower appears.

Underwriting is the lender's process for evaluating risk before approving or pricing credit.