17 Consumer Loan Underwriter Interview Questions and Answers

As a consumer loan underwriter, you play a critical role in the consumer lending process. Your job is to assess the creditworthiness of loan applicants and to recommend approval or denial of a loan.

If you’re looking for a job in consumer lending, you’ll need to be prepared to answer some tough questions. In this guide, we’ll provide you with some sample questions and answers that will help you ace your interview and land the job you want.

Are you familiar with the Fair Credit Reporting Act?

The Fair Credit Reporting Act is a federal law that protects consumers from inaccurate information on their credit reports. Employers ask this question to make sure you understand the importance of following this law when working as an underwriter. In your answer, explain how important it is to follow this law and provide examples of how you’ve done so in the past.

Example: “Yes, I am familiar with the Fair Credit Reporting Act. As someone who has worked in financial services for many years, I know how important it is to protect consumers’ rights. When reviewing applications, I always ensure that I only pull one credit report per applicant. This helps me avoid any issues related to pulling multiple reports at once.”

What are some of the most important factors you consider when underwriting a loan application?

This question can help the interviewer determine how you prioritize your work and what skills you use to complete it. Use examples from previous experience that show you understand the importance of each factor and how you apply them in your decision-making process.

Example: “I consider several factors when underwriting a loan application, including the applicant’s credit score, debt-to-income ratio, income stability and employment history. These are all important because they tell me about an individual’s ability to repay their loan. I also look at whether or not the borrower has any late payments on their credit report, as this could indicate they’re having trouble managing their finances.”

How would you rate your negotiation skills? Can you provide an example of a successful negotiation you’ve conducted?

The interviewer may ask this question to assess your ability to negotiate with clients and other stakeholders. Use examples from previous work experience or personal life that show you can successfully communicate, understand different perspectives and reach mutually beneficial agreements.

Example: “I have strong negotiation skills because I am a good listener who is able to empathize with others. In my last role as an underwriter for a small mortgage company, I worked with a client who was looking to refinance their home loan. The client had some credit issues in the past, but they were working hard to improve their score. I listened carefully to what they wanted and helped them find a solution that would allow them to achieve their goals while also meeting our requirements.”

What is your experience with underwriting auto loans?

Auto loans are a common type of loan underwriting experience. Employers ask this question to see if you have the necessary skills and knowledge for their position. When answering, make sure to include your specific experience with auto loans. If you don’t have any experience, explain what other types of loans you’ve worked with in the past.

Example: “I haven’t had much experience with auto loans specifically, but I have been an underwriter for several years now. In my last role, I was responsible for underwriting all kinds of loans, including personal loans, mortgages and credit cards. I am confident that I can apply my previous experience to help me succeed in this role.”

Provide an example of a time when you had to deny a loan application and explain why you made that decision.

An interviewer may ask this question to learn more about your decision-making process and how you handle conflict. When answering, try to focus on the reasoning behind your decision rather than the applicant’s reaction.

Example: “In my last role as a consumer loan underwriter, I had an applicant who was looking for a personal loan with a high interest rate. The applicant had a low credit score and no savings account, so I denied their application. They were upset by my decision but understood when I explained that they would be better off applying for a lower-interest loan once they saved up some money.”

If approved for a loan, what would be your first purchase?

This question is a way for the interviewer to learn more about your personality and values. It’s important to be honest in your answer, but you can also use this opportunity to show off your sense of humor.

Example: “If I were approved for a loan, my first purchase would probably be a new car. I’ve been driving my current vehicle for over 10 years now, so it’s definitely time for an upgrade. However, if I had enough money saved up, I’d rather buy a house.”

What would you do if you disagreed with a colleague about a loan applicant’s eligibility for a loan?

As a consumer loan underwriter, you may work with other professionals to determine whether an applicant meets the eligibility requirements for a loan. When answering this question, it can be helpful to describe how you would collaborate with your colleagues and use your communication skills to resolve any disagreements.

Example: “If I disagreed with my colleague about an applicant’s eligibility for a loan, I would first try to understand why they made their decision. If we still disagreed after discussing our reasoning, I would ask them if there was anything else that could help us make a final decision. For example, I might ask them if they have more information about the applicant’s credit history or income. By asking questions and collaborating with my colleague, I can ensure that we provide the best service to applicants while also following company guidelines.

How well do you understand the differences between mortgages and home equity loans?

This question can help the interviewer assess your knowledge of different types of loans and how you apply that knowledge to your work. Use examples from your experience to highlight your expertise in this area.

Example: “In my previous role, I worked with both mortgages and home equity loans. When working with a mortgage, I would evaluate the client’s credit history and income to determine if they were eligible for a loan. If so, I would then calculate their debt-to-income ratio to see if it was within the lender’s requirements. For home equity loans, I would do similar research on the borrower but also consider the value of the property before determining eligibility.”

Do you have experience working with personal loans? If so, what is the maximum loan amount you’ve approved?

This question is a great way to determine the applicant’s experience level and how they perform under pressure. It also gives you an idea of what their maximum loan amount would be for your company.

Example: “I have worked with personal loans in the past, but I haven’t had any experience working with consumer loans. However, my previous employer did offer personal loans, so I am familiar with the process. In my last position, I was able to approve up to $50,000 in personal loans per month.”

When underwriting a loan application, what is the first thing you do?

This question is an opportunity to show your interviewer that you have a process for completing tasks and how you prioritize them. Your answer should include the steps you take when underwriting loans, including what order you complete them in and why you do so.

Example: “The first thing I do when underwriting a loan application is read through it thoroughly. This step helps me understand the borrower’s financial situation and gives me insight into their credit history. Next, I check the applicant’s credit score to see if they meet our requirements. If not, I’ll contact them to discuss ways they can improve their score.”

We want to attract customers who have a strong credit history. What is your definition of strong credit?

This question helps the interviewer understand your credit standards and how you would define a strong credit history. Your answer should include examples of what makes a good credit score, including factors that make up a credit score.

Example: “A strong credit history is one where the applicant has no late payments or collections on their record. They have a long history of making timely payments and have never been in default. I also look for applicants who have a variety of different types of credit accounts, such as a mortgage, car loan and credit card.”

Describe your process for verifying a customer’s employment when underwriting a loan application.

The interviewer may ask you to describe your process for a specific task, such as verifying employment. This question can help the interviewer understand how you use your critical thinking skills and attention to detail when completing important tasks in the role.

Example: “I start by asking the customer about their current employer and if they have been with the company for at least one year. If so, I then ask them about their previous employers and if they worked there for at least one year. If the customer has been employed for two years or more at both of their previous and current jobs, I verify that information through an online database.”

What makes you a strong candidate for this job?

Employers ask this question to learn more about your qualifications and how you feel they align with the job. Before your interview, make a list of all your relevant skills and experiences that relate to the position. Make sure to highlight any unique or impressive aspects of your background.

Example: “I have five years of experience as an underwriter for consumer loans. I am very familiar with the process of evaluating loan applications and determining which ones are most likely to be approved. In my previous role, I helped increase our approval rate by 10% within six months of starting. This is because I know what information lenders need from applicants and how to evaluate it effectively.”

Which industries do you have the most experience working in as a consumer loan underwriter?

This question is a great way for the interviewer to learn more about your experience and how it relates to their company. When answering this question, make sure you mention which industries you have worked in and what types of loans you underwrote in those industries.

Example: “I’ve spent my entire career working as a consumer loan underwriter. I started out at a small bank where I was responsible for reviewing applications for personal loans, home equity loans and credit card debt consolidation loans. After five years there, I moved to a larger bank where I reviewed applications for all three of those loans as well as car loans and business loans.”

What do you think is the most important skill for a consumer loan underwriter to have?

This question is your opportunity to show the interviewer that you have the skills and abilities needed for this role. You can answer by identifying a skill from the job description, such as customer service or communication, and explaining how you use it in your daily work.

Example: “I think the most important skill for a consumer loan underwriter is empathy. I understand that everyone’s financial situation is different, so I treat every applicant with respect and try to help them find a solution that works for their unique needs. For example, when I was working at my previous company, an older couple came into our office looking for a reverse mortgage. I listened carefully to what they were looking for and helped them understand all of their options.”

How often do you think a consumer loan underwriter should update their knowledge on credit trends and changes in the lending industry?

This question can help interviewers understand how much you value your own professional development. It’s important to show that you’re willing to learn and adapt as the industry changes.

Example: “I think it’s essential for a consumer loan underwriter to stay up-to-date on current trends in the lending industry. I try to read at least one article or blog post per week about credit trends, new regulations or other information that could be relevant to my work. I also take online courses through my university’s continuing education program to expand my knowledge of different types of loans.”

There is a new law that will impact the way you approve loan applications. How will you adjust your process?

This question is a great way to test your knowledge of the industry and how you can apply it to new legislation. When answering this question, make sure to explain what the law is and how you would adjust your process to ensure compliance.

Example: “There is a new law that requires all loan applications to be approved within 30 days. If I were presented with an application that required approval in less than 30 days, I would need to approve the loan immediately or reject it. This is because there are no exceptions to the rule. However, if I had more time to review the application, I would do so and then either approve or deny the loan.”