What term describes the process of evaluating a borrower's ability to repay a loan?

The term that describes the process of evaluating a borrower's ability to repay a loan is underwriting. This critical stage involves assessing various factors, such as the borrower's creditworthiness, income, employment history, debt-to-income ratio, and overall financial situation. Underwriters review this information to determine the risk associated with lending to the borrower, and ultimately make decisions on whether to approve or deny the loan application.

While credit assessment and risk analysis are related concepts that involve evaluating aspects of the borrower's financial profile and associated risks, underwriting is a more comprehensive and specific process. It combines credit assessment and risk analysis to ensure that the lender's standards are met.

Loan servicing, on the other hand, refers to the management of a loan after it has been originated, which includes collecting payments and managing the loan account. This is distinct from the initial evaluation of a borrower's ability to repay a loan.