The right lending term

When designing software, I find it crucial to name entities using terms that reflect the business domain.

First, the meaning of the terms helps to identify the entity's properties.

And second, when you use the wrong terms, it eventually bites you in the ass as the complexity of the software increase, and you end up needing this term for a different thing.

I have been looking for an umbrella term for the parent class of Credit Cards, Loans and BNPL Plans in lending software.

I've probably spent more time than I should, but still, anyway, here's what I found.

Credit Facilities

After initial research, I stumbled on the "Credit Facility."

It did seem like a good choice because it represents a lending agreement between the borrower and the lender.

And describes the terms on which a lender extends credit to a borrower:

• Interest rate

• Repayment type

• Amounts

• etc

CCs, loans, and BNPL plans have these properties.

But while I could generalise credit cards, loans, and BNPL plans for a credit facility, it's a stretch.

From my research, Credit Facility is a more common term for a broader lending agreement that could potentially have multiple credit accounts under it.

A single credit facility could have a credit card and a loan under it.

I figured that was not exactly what I wanted, so I set it aside for future use.

The simpler, the better. And "Credit Facilities" isn't simple.

Credit Products

For a moment, I considered using "Credit Product" as an umbrella term.

Loans, CCs and BNLP plans are all credit products.

But it didn't seem quite right either.

While all of them are products, the term "Product" has a different meaning than what I was looking to represent.

You don't create a new "Product" when you create a new instance of the Loan for John Doe.

In the same way, a car manufacturer doesn't create a new "Car Model" every time a car goes out of the conveyor belt.

Credit Product has the meaning of "Offering." If lenders were stores, a credit product would be an item in their product catalogue.

Each product has eligibility criteria, fees, limits for amounts and terms, etc.

Plus, lenders have a lot of variations of the Credit Products. It's not unusual for lenders to have 20+ products.

Creating 20+ classes inheriting from Credit Product would be cumbersome.

I'll use Credit Products to model offers, but I still need to find a term to describe instances of loans and CCs.

Credit Accounts

After more research, I came across "Credit Accounts."

Loan Balance and Credit Card Balance sound right.

It's simple and has a meaning that represents what I was looking for.

But still not quite there.

While it does cover shared properties, it's more suitable for accounting.

"Account" works well in servicing, but didn't fit well into the origination process.

Properties like the amortisation schedule, term, collateral, etc, would be foreign to the account entity.

I'll use it, but I need to find something else to cover the loan terms, like the interest rate or amortisation schedule.

Credit Agreements

A Credit Agreement, in some way, is the opposite of the Credit Account.

It covers properties that represent terms on which lenders extend credit.

But account properties like balance or payment history would be foreign to the agreement entity.

I'll take what it has to offer.

Putting it all together

Credit Accounts and Credit Agreements covered most of the properties I was looking for.

So, I figured I'd use "Credit" as an umbrella term for an aggregate that ties together Credit Accounts, Credit Agreement and Credit Products.

Loans, Credit Cards and BNPL Plans will inherit shared properties from "Credit".

It makes sense that a Loan, for example, has:

• Loan Product it originates based on

• Loan Agreement that covers credit terms

• Loan Account on the books that keeps track of the balance.

"Credit" is quite a vague term.

But I don't think, at this point, the benefit of finding a better term would justify spending more time on it.

It does the job. I'll likely find a better one in the future.

But I'm glad to find something that made sense, at least for now.

That's it for today.

I hope this gave you some useful ideas for building better lending software.

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