Loan Officer and Credit Counselor
A loan officer assists prospective clients in applying for loans and in determining the type and amount of loan that is most suitable for their needs. He or she also assesses the creditworthiness of loan applicants, judging their suitability as borrowers and the precise terms (interest rate, repayment schedule, etc.) on which credit may be granted to them. Depending on the position, a loan officer may be expected to actively seek out clients, rather than passively wait for applicants to approach his or her financial institution (bank, credit union, etc.) for credit.
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Loan Officer vs. Credit Counselor
The Bureau of Labor Statistics (BLS) considers a credit counselor to be a subcategory of loan officer, with similar skill sets and levels of compensation.
A loan officer tends to specialize in one of three major types of lending: commercial, consumer or mortgage. Commercial lending is the extension of credit to businesses. Consumer lending includes personal loans, education loans, home equity loans and auto loans, among others. Mortgage lending includes loans for the purchase of real estate by individuals (a business normally would be served by a commercial loan officer, even for real estate purchases) or the refinancing of existing mortgages.
A Bachelor's Degree is expected. Coursework in finance, accounting and/or economics is helpful, though not required. Excellent quantitative skills are vital, but so is the ability to make accurate assessments about people, especially their credibility and their reliability.
An MBA can make you a stronger candidate for hiring, depending on the firm.
Most loan officer positions do not require any special certification or licensing. A notable exception, however, is mortgage lending. Most states regulate this field, especially regarding positions in mortgage banks or mortgage brokerages, rather than in traditional banks or credit unions.
Duties and Responsibilities
The majority of loan officer positions combine sales responsibilities with analytic requirements: selling loans while determining who are appropriate clients, and on what terms. Some positions are focused largely on the analytics, with no sales dimension and limited client contact. People in these types of jobs are sometimes called loan underwriters. Other positions specialize in dealing with clients who are having problems meeting their payments. One example is a loan collection officer, who tries to work out agreements with troubled borrowers that adjust the repayment terms.
The majority of people in loan officer jobs tend to work a standard 40 hour week. A consumer loan officer is most likely to work set hours from a fixed location, such as a bank branch or office. A commercial or mortgage loan officer often has to work variable hours to confer with clients at the latter's places of work or residence, and thus spend significant time out of the office and on the road.
What's to Like
Depending on the firm and its policies, a loan officer can have a large degree of professional autonomy, more akin to being an independent entrepreneur than a corporate employee.
If the compensation scheme is largely commission-based, there is a close correlation between performance and reward, with high earnings potential. Also, doing your job well can make a discernible, positive impact on your clients' lives.
What's Not to Like
Rejecting loan applicants who do not meet your institution's lending criteria can be an unpleasant process, as can dealing with clients who have run into financial difficulties and cannot repay their loans as agreed. Also, loan officers who are expected to prospect for new clients can be under heavy pressure to perform, the downside of the greater earning potential that such a position offers.
Median annual compensation was $58,820 as of May 2012, with 90% earning between $32,600 and $119,710. Compensation schemes vary by employer, with varying mixtures of salary and commission.
Where commissions are paid, they normally reflect the number and/or value of loans originated. The highest pay packages tend to be commission-based and at large institutions. As with all job categories, expect significant geographic pay differentials.