Lending & Credit
Lending systems decide who gets money, on what terms, and what happens when repayment stops. The engineering is shaped by the fact that every decision must be explainable to the applicant and defensible to a regulator.
Assumes you know: Comfort with compound interest and money arithmetic, Basic relational data modelling, Some exposure to how a ledger is structured
Overview
What this area actually covers
Lending is giving someone money now for a claim on their future income, and the systems split into three phases. Origination takes an applicant from enquiry to funded loan: capture, identity and income verification, a credit decision, an offer, an agreement, disbursement. Servicing runs the loan for its life — schedule, payment allocation, interest accrual, statements, part-payments, changes of terms. Collections handles loans that stop performing, through to recovery, write-off, or sale of the debt.
Two things get wrongly bundled in. Payments is one: a lender needs rails to disburse and collect, but clearing and settlement belong elsewhere. Fraud is the other — it asks whether this person is who they claim to be, where credit asks whether this person, genuinely themselves, will repay. Dressing a fraud decline up as a credit decline is also a regulatory problem, because what you owe the applicant differs.
Where to go next
Now practise it
2 interview questions on this topic, each with the rubric the interviewer is scoring against.
- A borrower misses a payment. Take me through what your systems do from that morning through to the loan being written off.
- Take me through how your system decides to approve or decline a loan, and how it explains a decline to the applicant.