If you've looked at internships at financial institutions (like banks and insurance companies), you may have come across some "credit analyst" or "underwriting" roles. What do these terms mean? And is this the career for you?
✨ "Underwriter" defined
🔍 How does underwriting work?
❓Why does underwriting matter?
🌈 What are the different types of underwriters?
💼 What underwriters do day-to-day
👍 Pros of being an underwriter
👎 Cons of being an underwriter
⚖️ Work-life balance
🌱 Learning & development
💵 Pay
📈 Career progression
🌟 Job outlook
🔀 Exit options
3. Where can I find internships?
Remember when you were applying for college and how you had to gather all your documents, essays, and recommendations to show you're a great candidate?
Well, after you sent in all that information, there was an admissions officer who reviewed your application to help the school decide whether they should accept you.
An underwriter is basically the admissions officer of the financial world. For example, let's say you've applied for a loan from a bank. An underwriter will go through your application to help the bank decide if they should lend you money.
Note: Underwriters also exist in insurance companies, investment banks, credit card companies, credit rating agencies, and more – we'll get into some of these later.
Underwriting, stripped down to its basics, is a process financial institutions use to review applications for loans (and insurance and investments). There are two main steps to underwriting: gathering data and assessing risk.
I think underwriting is best understood as a process that involves gathering data in order to make a risk-based decision on a product or service.
– Junior underwriter @ a community bank
After completing these two steps, the underwriter will recommend whether to approve or deny your application. They'll also suggest terms (like how much money you can borrow and at what interest rate). A loan officer or committee then makes the final decision.
To understand what why underwriting matters, it helps to first think from the perspective of a bank. For banks, loans are a risk.
In a world without underwriting, banks wouldn't have a clue about whether potential borrowers would be able to pay them back. Each loan would become a huge risk.
To make up for that risk, banks would either charge sky-high interest rates (raising the "price" of borrowing money) or stop lending altogether. It would then get harder for everyone to borrow money for things they need.
Underwriting creates a win-win:
In other words, underwriting makes the financial system healthy for everyone.
Loan underwriters are the folks we've been discussing so far. They check your credit scores, income, and debt situation to help a bank decide whether you should get an auto loan, student loan, etc.
They don't just serve individuals though! Businesses of all sizes rely on underwriters too. Just as you might borrow to pay for a car or an education, companies also borrow to purchase new equipment or expand their business. These are called "commercial loans."
Loan underwriting is one of the most common entry-level roles at banks. As a result, banks (big and small!) offer internships that expose students to this field. They're sometimes called "credit analyst" internships.
You’ll support our Bankers, Underwriters, Treasury, and Product Partners to provide a range of solutions while honing your financial and client-facing skills
– JP Morgan | Middle Market Banking & Specialized Industries Summer Analyst Program
Real estate underwriters are loan underwriters who specialize in property loans. This means homes (for individuals) and offices, warehouses, and other facilities (for businesses).
Why are real estate underwriters often put in their own category?
Here's an example of a real estate underwriting internship at a bank.
Transaction work will include underwriting new investment opportunities, conducting due diligence, executing transactions, and developing internal investment presentations.
– Morgan Stanley | Investment Management Summer Analyst Program - Real Estate Investing
Insurance underwriters assess the risk of insuring people or property. This could involve evaluating your driving record for car insurance, your health history for life insurance, or the condition of your home for property insurance.
Their goal is to figure out how likely you are to make a claim on your insurance policy – and by extension how much you should pay for your insurance. In other words, they assess how probable it is that the insurance company will need to pay if, say, you get injured and need to spend a lot of money on hospital costs.
Here's an example of an underwriting internship offered by a health insurance company.
You will be assigned underwriting responsibilities to make direct contributions to our underwriting goals, as well as an intern project that will challenge your problem-solving and innovation skills.
– The Cigna Group | Risk Management & Underwriting Summer Internship Program
Securities underwriters work in the investment banking industry, connecting companies with investors.
Imagine a company needs a lot of money to grow. Why not take out a loan?
This is where securities underwriters come in. They check the company's financial health, future prospects, and the value of their "slices" (stocks) or "coupons" (bonds).
They make sure everything is on the up and up – and once they're confident about the company, they act as matchmakers, connecting the company (selling the securities) with investors (who want to buy those slices or coupons and potentially earn a return on their investment).
Investment banks offer internships that expose you to securities underwriting.
As a summer analyst, your key tasks and responsibilities may include but are not limited to: Supporting the team in all aspects of client (internal and external) coverage and deal execution including pitching new business, underwriting, due diligence, ...
– Bank of America | Securitized Products Summer Analyst Program
As an underwriter on the corporate banking side of things, you'd typically be called a "credit analyst" and serve big corporate clients (think: McDonald's, Walmart, etc).
For example, at JP Morgan, your title would be "Credit Risk Analyst" and your responsibilities would include underwriting, portfolio management, and exception management. In simpler terms, this means:
In essence, this entire process is about ensuring that the money lent out is handled wisely, risks are managed effectively, and any issues are swiftly addressed.
Here's how a former credit risk analyst explains how they evaluate a corporate client's request for a credit extension (think of this as a pre-approved loan that the business can use whenever they need extra funds).
When a credit risk analyst receives a request to review a project, they're not only looking at that project in isolation, but they're also looking at all of the inputs required to make that company and project successful.
So if we look at a company such as Coca-Cola and they came to you to have a credit extension on the project that they're undertaking, you're not only going to be analyzing the trends in the beverage industry and understanding how that's going to impact their revenue stream.
You're going to be looking at the raw ingredients required to make the products. So that'll be the commodities market.
You'll be looking at the cost required to package a product, which again would be a good understanding of the supply cycle.
And lastly, you'll investigate the potential disruptions that could occur in the distribution channels.
Underwriters who help smaller businesses are also generally called "credit analysts."
At my small bank of roughly 100 employees, we have three full-time credit analysts! These are the underwriters for commercial loans, meaning loans for businesses.
When a company applies for a business loan, they need to submit three years of tax returns. So basically a credit analyst's full-time job is looking at those tax returns. Based on that, they determine a debt-to-income ratio, decide yay or nay, and then they take the file to committee.
Commercial loans usually take two to six months – compared to mortgage loans which take 30 days to complete.
– Mortgage underwriter @ a community bank
Underwriters in a retail setting underwrite loans for individuals like you and me. The main form of underwriting here is mortgage underwriting.
The #1 thing I do is paperwork!
In terms of tasks, here are the main ones, in order of the amount of time I spend on them.
- Credit analysis involves reviewing the borrower's credit score and credit report.
- Income analysis is when you figure out if the borrower has the ability to repay based on their income. This come down to the debt-to-income ratio and different products and investors (who buy our loans) have different rules as to what debt-to-income ratio they're looking for and what types of income count (e.g. commission, salary, etc).
- Appraisal value analysis: Appraisal reports are 30-page reports on the home that tell you how much it's worth, based on things like the condition it's in, the type of home it is (is it one-story or two-story? Detached or attached?), and sales of comparable homes nearby. If the appraised value is lower than the amount the borrower is buying the house for, we can't offer them as much in mortgage.
- Title review commitment: We order title work to make sure the property title is clear. This means there are no outstanding claims or ownership issues that could prevent you from buying the house. For example, if there are actually four owners or if the owner hasn't paid state taxes in years, these are issues that complicate the process.
- Clearing conditions: After your loan gets approved, it needs to be cleared to close. This involves getting all the paperwork we need in the closing package. Then there's an agreed upon possession date and then you get the home. We try to get them closed as fast as they can so they get their home!
– Mortgage underwriter @ a community bank
Surprisingly, insurance underwriters don't spend a lot of their time underwriting anymore.
We found that the average underwriter today spends 70% of their time at work on non-underwriting activities. The average underwriter in our study spends 40% of their time on administrative tasks, 30% on negotiation and sales support, and 30% on actual underwriting.
One underwriter told our research team that “underwriters have been turned into marketing executives instead of underwriting executives.”
In many contexts, underwriters aren't supposed to interact with customers. This is to make sure they evaluate risks based solely on data and factual information. It also makes underwriting a great job for people who prefer working behind the scenes and focusing on analysis rather than direct customer interaction.
I don't really talk to the client. I'm quiet, I'm not outgoing. I enjoy not having customer contact. It's a great job for hermits!
– Mortgage underwriter @ a community bank
If you're on the retail side of the bank (or the "banking side"), that's very sales-driven. You'll be expected to bring in deposits, business, new customers. As an underwriter, the work is brought to you. No sales is involved.
– Mortgage underwriter @ a community bank
It's a very well-paying job, because it's a valued position. And that's because you're making the credit decision and you're deciding whether the bank is going to take the risk.
– Mortgage underwriter @ a community bank
Every file is different, which makes it interesting to keep working in the field. And you have different products to underwrite too.
Things are constantly changing – besides the basic debt-to-income calculations, all the guidelines change. We have weekly updates on the changes from government agencies so you have to stay up-to-date.
So it's a good job if you're willing to work through change.
– Mortgage underwriter @ a community bank
Overall, the role is pretty exciting because you get to see the full picture of the client. Sometimes for sensitive clients, a credit analyst and the officer are the only ones allowed to see the full financial picture.
At retail banks, your work directly impacts individuals.
It makes you feel good when you help people get their first home. I like approving people's loans.
– Mortgage underwriter @ a community bank
Being an underwriter is highly stressful. I like my job and deadlines are a big stressor, because you gotta get things done on time for people. Our business is very realtor-based. Realtors will say "I have a lender who's great to work with." If you don't close on time, they'll take their business elsewhere as that's how realtors get paid. You have to keep everyone happy – borrowers, realtors, loan officers – but nobody cares if the underwriter is happy!
– Mortgage underwriter @ a community bank
Underwriters are not very liked. I saw someone I hadn't seen since high school and the moment he heard I was a mortgage underwriter, he was like "Oh ..."
Borrowers dislike us because we ask for things. They want to know why you want certain documents – they'll be like "Why didn't my other bank ask for this?"
And when we deny a loan, they hate us!
– Mortgage underwriter @ a community bank
I'd say my work-life balance has been perfect since remote work started under COVID. A lot of underwriters have gotten to work from home since then. I have a nice office but I'm glad my bank lets us work hybrid so I can avoid a long commute.
My typical hours are 8-5 with an hour of lunch or 8:30-5 with a half an hour of lunch. Today's a work-from-home day so I can start between 8-8:30.
However, we do have busy season, which is May to September. When the weather gets nice, everyone wants to move! So during summer months, there are plenty of weeks where I'm working seven days a week and can't ever go on vacation.
Some bigger banks will hire more people so they don't have to work weekends, but then, they let those people go when they don't need it. It depends on the place. For us, we decided it's temporary and you just get through it.
– Mortgage underwriter @ a community bank
At retail banks, most of your learning as an underwriter will take the form of becoming well-versed in different loan products.
Over the years, I've learned new products to lend on and how to underwrite those. I've now gotten Veteran Affairs (VA) certification for appraisal review and credit review.
To learn everything and become a full-fledged underwriter takes three years, since we offer pretty much all of the products out there except a couple, and we have to be well-versed in all them.
There's a newer underwriter who I'm training now. I've set out a three-year plan for her. Every six months, she learns a new product. In order of complicatedness, there's:
- Conventional underwriting (underwriting for conventional loans)
- Portfolio underwriting (for loans that stay in our bank)
- Federal Housing Administration (FHA) loans
- Veterans Affairs (VA)
- Ohio Housing Finance Agency
- USDA
– Mortgage underwriter @ a community bank
Here's the median salary for different types of entry-level underwriters according to Glassdoor.
| Type of underwriter | Median salary with 0-1 years of experience |
| Underwriter (Industry: Insurance) | $69k |
| Credit analyst | $69k |
| Credit risk analyst | $88k |
A credit risk analyst will generally focus on a sector. So whether that's the aviation industry, automotive industry, or media.
One of the ways a credit risk analyst would progress their career would be to either stay in their current sector and have a deeper understanding of it or move into another sector and widen your skills and knowledge.
Either way, as you develop your knowledge in all sectors, you'll have more and more approval limits. So for example, as someone in their first or second year, you might have an approval limit of around 50k, whereas after five years of working, you'll become quite senior and you'll be given an approval limit of around 500k.
Most credit risk analysts start as junior analysts. After gaining a few years of experience, those that excel may have the opportunity to move up and become senior analysts. Senior analysts often deal with more complex problems and may oversee other analysts. Those who move beyond senior analyst positions may go on to become financial managers, who oversee an entire department of analysts.
Employment of loan officers is projected to grow 3 percent from 2022 to 2032, about as fast as the average for all occupations.
About 25,300 openings for loan officers are projected each year, on average, over the decade. Many of those openings are expected to result from the need to replace workers who transfer to different occupations or exit the labor force, such as to retire.
Employment of insurance underwriters is projected to decline 2 percent from 2022 to 2032.
Despite declining employment, about 8,200 openings for insurance underwriters are projected each year, on average, over the decade. All of those openings are expected to result from the need to replace workers who transfer to other occupations or exit the labor force, such as to retire.
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