Old Credit Issues? Ask Your Lender to Manually Underwrite Your Loan Manual underwriting is how all loans were evaluated before computer algorithms took the human logic out of the process. Simply stated, a loan that is manually underwritten is one where a person evaluates the file for the borrower’s ability to make the loan payments. For those who have had credit issues in the past that are easily explained and understood, requesting a manual underwriter may make the difference between getting the loan or not. Almost everyone has gone through difficult financial times at some point in life. Perhaps a divorce or job layoff caused a glitch in the otherwise good credit of the borrower. A computerized system only catches the credit score and number of late or missed payments. A good credit risk can turn into a poor one simply because a computer can’t understand the circumstances which caused the problem—but a person can. How Does It Work? Before an underwriter will approve a loan, they need to understand the borrower’s ability to pay and their overall financial situation. The loan package will include bank statements, tax returns, pay stubs, savings accounts, and other forms of verification. The underwriter will review the provided documentation and any personal statement of explanation provided for negative records. They will consider not just the credit score, but also recent job promotions and special situations which explain a difficult period in an otherwise perfect record of on-time bill paying. In short, they can view the overall package from a human perspective and make a reasonable decision. For anyone who has had a difficult financial history due to divorce, job loss, a death in the family, or failed business, asking for a manual underwriting review can prove their creditworthiness and obtain a loan that would otherwise have been out of reach.
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