When it comes to the loan origination process, every firm uses its own unique procedure. From the software used to the quality control steps an organization requires before funding, each uses a process that works for its own needs and the needs of the clients they serve. When looking at the origination lifecycle from a holistic perspective, it is vital to evaluate all possible standpoints.

Loan Origination software lending dollar hand giving dollar


Even though each loan origination process differs, they all follow seven distinct steps that comprise the entire loan origination system. Each of these seven steps is critical to an overall process that appropriately functions.

Stage 1: Pre-Qualification

At the pre-qualification stage, the borrower will receive a list of items needed to compile and present to the lender to move forward with the process. The list of items a borrower needs to present includes:

  • Information about present employment, including the hourly pay, annual salary, and overall average earnings
  • Payment history
  • Bank statements
  • Tax returns

After providing the paperwork, it will normally undergo processing, after which the institution will generate a loan pre-approval. The application of the prospective borrower will proceed through the loan origination system.


Stage 2: Loan Application

The borrower is responsible for filling out the loan application at this point in the process of the loan origination system. New technologies made possible by loan origination software allow for successful registration online and through a smartphone app. You can then use the data to fit particular loan management requirements.


Stage 3: Application Processing

The application gets reviewed for consistency and completeness after being received by the credit department. A smart loan origination system or LOS can automatically indicate files without the necessary data and return them to the borrower.

Benefits of a Smart Loan Origination System

A smart, high-quality Loan Origination System can provide the following:

  • Multiple-channel application receipt
  • Online bureau reports
  • Credit score calculations
  • Promotions like lower rates or no interest for a time
  • Automatic or manual credit choices
  • Individual application rescoring
  • Automate decision-making
  • The real-time data link between origination, funding, and servicing
  • Customize underwriting workflow
  • Status, dealer, user, or underwriter-based application reports


Stage 4: Underwriting Process

During the underwriting process, the lender reviews the application based on several factors. Many firms developed supplementary scoring standards particular to their firm or industry.


Stage 5: Credit Decision

The underwriting procedure of the loan management will determine whether the application gets granted, denied, or returned to the applicant.

  • Granted: The application is granted pending approval through the quality control process.
  • Denial: If specific conditions alter, such as lowering the loan balance sought or adjusting interest rates to lower payments.
  • Sent back: Request for more details.


Stage 6: Quality Control

Lenders put significant effort into the quality control phase of the origination system process. Here, the application gets delivered to a quality control channel where you can assess a conclusion and other crucial factors compared to domestic and foreign policies and standards.


Stage 7: Loan Funding

Consumer loans begin to pay off soon after the loan agreement gets finalized and signed. A robust loan origination software can monitor financing to ensure that the required paperwork is signed before or concurrently with the loan management process.



Loan applications can be a long process. Luckily, loan management software is now available. This software makes the application process and the loan processing itself a lot easier. Contact Fundingo today to get the best software possible for your firm!