Loan origination is one of the largest applications we see here at Decisions. The rule engine and workflow manager foundations of our platform are both integral to an effective loan origination process. We are all familiar with the two most common types of loans: mortgage and auto. However, there are countless other types of loans offered by specialty lenders and financial institutions, including personal loans, student loans, payday loans, credit cards, and numerous types of business loans.
The loan origination process evaluates an individual’s or business’ financial information, determining their creditworthiness, and deciding whether to approve or deny a loan based on this information. This process typically follows five routine steps:
- Pre-qualification: During this step, the borrower provides basic information about themselves and their financial situation to the lender. Based on this information, the lender may give the borrower an estimate of the loan amount for which they could be eligible.
- Application: If the borrower decides to proceed with the loan process, they will complete a loan application. This step typically includes more detailed information about their financial situation, such as income, assets, and debts.
- Evaluation: After the loan application is submitted, the lender will review the borrower's financial information and evaluate their creditworthiness. This involves proprietary underwriting criteria and third-party data sources to verify the information provided in the application, and applying customized credit scoring models to assess the borrower's credit risk.
- Approval: If the borrower's loan application is approved, the lender will provide a loan offer, which will include the terms and conditions of the loan, such as the interest rate, repayment period, and any fees or charges.
