Underwriting is the process used by financial institutions, like banks or insurance companies, to assess the risk of lending money, insuring, or guaranteeing assets. Underwriters evaluate applications by analyzing financial histories, credit scores, income stability, and other relevant data to determine the applicant’s creditworthiness or the insurability of a policyholder. This evaluation helps lenders or insurers decide if they should approve or reject the application and what terms, such as interest rates or coverage limits, should be applied to minimize risk.