Business rules
Business rules are the policies and conditions a business decides by, written so they can be applied the same way every time. In lending, they can cover affordability or pricing, and can be kept, tested and changed as policy evolves.
Example
For illustration, a lender could set $2,000 as the threshold for verified monthly income: applications below it go to manual review, and applications at or above it continue to the next policy check.
Types of business rules in lending
A constraint sets a condition that must hold. For illustration, a lender could require an applicant to be at least 18.
A derivation calculates a value from supplied information. For illustration, monthly debt payments of $600 divided by monthly income of $2,000 gives a debt-to-income ratio of 30%.
A decision rule applies a lender’s chosen condition to reach an outcome. For example, an application above the lender’s debt-to-income threshold is declined. An action rule can then trigger a letter explaining the reasons for the decline.
How business rules are recorded and changed
Rules kept in application code change only with a software release. In a rules engine or decision table, the people who own the policy can change the rules, with versions and an audit trail.
Before a changed rule goes live, it can be run on past applications to see which decisions would change. That gives the lender a view of the proposed change’s effect before release.
Questions we get asked
Who supplies the data used by lending business rules?
The lender supplies the data and writes the policy the rules apply. The business rules express the conditions the lender chooses to use with that information.
Do business rules replace a lender’s credit policy?
No. The lender remains responsible for its policy and supplies the data. Business rules set out the lender’s chosen conditions so they can be applied consistently.
Why run a changed business rule on past applications?
Testing a changed rule on past applications shows which decisions would change under it. The lender can review those differences before the rule goes live.
In Decisimo's business rules engine, every save creates a revision that can be compared or reverted before a release is deployed.
