Description
Loan officers assess and authorise the approval of loan applications for individuals and businesses. They ensure complete transactions between loan organisations, borrowers, and sellers. Loan officers are specialists in consumer, mortgage, or commercial lending.
Duties
Loan officers typically do the following:
- Meet with loan applicants to gather personal information and answer questions to evaluate their loan application and risk
- Explain to applicants the types and terms of each loan to determine a loan that is suitable for their specific needs
- Track and maintain credit and loan information
- Seek out new clients by contacting companies and people
- Work with existing clients to strengthen relationships, encourage referrals, and enhance your reputation among others seeking loans
- Work with borrowers who fail to make their loan payments on time
- Use loan underwriting software to make recommendations to customers
Other titles
The following job titles also refer to loan officer:
loans consultant
credit officer
loans controller
loans adviser
commercial lender
loan processor
loans agent
Working conditions
A consumer loan officer will most likely 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.
Most people in loan officer jobs tend to work a standard 40-hour week. However, commercial or mortgage loan officer hours vary, as they may need to travel to client locations, which may require working at odd hours.
Minimum qualifications
Loan officers typically need a bachelorโs degree, usually in a field such as business or finance. Because commercial loan officers analyze the finances of businesses applying for credit, they need to understand general business accounting, including how to read financial statements.
Some job seekers may be able to enter the occupation without a bachelorโs degree if they have related work experience, such as in banking, customer service, or sales. Organizations that specialize in specific fields typically prefer to hire candidates who have some experience in those areas. For example, mortgage companies may prefer to hire candidates with residential mortgage or real estate experience.
Once hired, loan officersย typically receive some on-the-job training. This may be a combination of formal, company-sponsored training and informal training during the first few months on the job.
In some jurisdictions, loan officers may need to hold a license.
ISCO skill level
ISCO skill level is defined as a function of the complexity and range of tasks and duties to be performed in an occupation. It is measured on a scale from 1 to 4, with 1 the lowest level and 4 the highest, by considering:
- the nature of the work performed in an occupation in relation to the characteristic tasks and duties
- the level of formal education required for competent performance of the tasks and duties involved and
- the amount of informal on-the-job training and/or previous experience in a related occupation required for competent performance of these tasks and duties.
Loan officer is a Skill level 3 occupation.
Loan officer career path
Similar occupations
These occupations, although different, require a lot of knowledge and skills similar to loan officer.
mortgage broker
mortgage loan underwriter
foreclosure specialist
credit adviser
credit analyst
Long term prospects
These occupations require some skills and knowledge of loan officer. They also require other skills and knowledge, but at a higher ISCO skill level, meaning these occupations are accessible from a position of loan officer with a significant experience and/or extensive training.
actuarial consultant
bankruptcy trustee
insurance rating analyst
corporate investment banker
investment adviser
Essential knowledge and skills
Essential knowledge
This knowledge should be acquired through learning to fulfill the role of loan officer.
- Banking activities: The broad and continuously growing banking activities and financial products managed by banks ranging from personal banking, corporate banking, investment banking, private banking, up to insurance, foreign exchange trading, commodity trading, trading in equities, futures and options trading.
- Actuarial science: The rules of applying mathematical and statistical techniques to determine potential or existing risks in various industries, such as finance or insurance.
- Credit control processes: The various techniques and procedures applied to ensure that credit is given to the suitable customers and that they pay on time.
Essential skills and competences
These skills are necessary for the role of loan officer.
- Analyse loans: Examine and analyse the loans provided to organisations and individuals through different forms of credit such as overdraft protection, export packing credit, term loan, and purchase of commercial bills.
- Interview bank loanees: Perform interviews with candidates requesting a bank loan for different purposes. Pose questions in order to test the goodwill and the financial means of candidates for paying back the loan.
- Decide on loan applications: Take into account the risk assessment and analysis and perform the final reviewing of the loan application in order to approve or deny the loan, and set in motion the necessary procedures following the decision.
- Interpret financial statements: Read, understand, and interpret the key lines and indicators in financial statements. Extract the most important information from financial statements depending on the needs and integrate this information in the development of the department’s plans.
- Examine credit ratings: Investigate and look for information on the creditworthiness of companies and corporations, provided by credit rating agencies in order to determine the likelihood of default by the debtor.
- Obtain financial information: Gather information on securities, market conditions, governmental regulations and the financial situation, goals and needs of clients or companies.
- Maintain credit history of clients: Create and maintain the credit history of clients with relevant transactions, supporting documents, and details of their financial activities. Keep these documents updated in case of analysis and disclosure.
- Monitor loan portfolio: Control the ongoing credit commitments in order to detect anomalies related to the schedules, refinancing, approval limits etc., and to identify improper disbursements.
- Consult credit score: Analyse the credit files of an individual, such as credit reports which outlines a person’s credit history, in order to assess their creditworthiness and all the risks that would be involved in granting a person a loan.
- Inform on interest rates: Inform prospective borrowers on the rate at which compensation fees for use of assets, such as borrowed money, is paid to the lender, and at which percentage of the loan the interest stands.
- Analyse financial risk: Identify and analyse risks that could impact an organisation or individual financially, such as credit and market risks, and propose solutions to cover against those risks.
Optional knowledge and skills
Optional knowledge
This knowledge is sometimes, but not always, required for the role of loan officer. However, mastering this knowledge allows you to have more opportunities for career development.
- Customer service: Processes and principles related to the customer, client, service user and to personal services; these may include procedures to evaluate customer’s or service user’s satisfaction.
- Debt classification: The different classifications of debt such as public and publicly guaranteed debt, private non-guaranteed credits, central bank deposits, etc.
- Foreclosure: The legal system surrounding the recovery of a loan or debt which a debtor or borrower has not completed the payments of and of which payments have been neglected by enforcing the sale of assets which were used as collateral for the loan.
- Securities: The financial instruments traded in financial markets representing both the right of property over the owner and at the same time, the obligation of payment over the issuer. The aim of securities which is raising capital and hedging risk in financial markets.
- Mortgage loans: The financial system of acquiring money by property owners or prospective property owners, in which the loan is secured on the property itself so that the property can be repossessed by the lender in the absence of payments due by the borrower.
- Property law: The law and legislation that regulates all the different ways to handle property, such as the types of property, how to handle property disputes and property contract rules.
- Debt systems: The processes needed to obtain goods or services before payment and when a sum of money is owed or overdue.
- Business loans: Loans which are intended for business purposes and which can either be secured or unsecured depending on whether a collatoral is involved. The different types of business loans such as bank loans, mezzanine finance, asset-based finance, and invoice finance.
- Tax legislation: Tax legislation applicable to a specific area of specialisation, such as import tax, government tax, etc.
Optional skills and competences
These skills and competences are sometimes, but not always, required for the role of loan officer. However, mastering these skills and competences allows you to have more opportunities for career development.
- Apply credit risk policy: Implement company policies and procedures in the credit risk management process. Permanently keep company’s credit risk at a manageable level and take measures to avoid credit failure.
- Collect property financial information: Collect information concerning the previous transactions involving the property, such as the prices at which the property had been previously sold and the costs that went into renovations and repairs, in order to obtain a clear image of the property’s value.
- Advise on risk management: Provide advice on risk management policies and prevention strategies and their implementation, being aware of different kinds of risks to a specific organisation.
- Maintain client debt records: preserve a list with the debt records of clients and update it regularly
- Protect client interests: Protect the interests and needs of a client by taking necessary actions, and researching all possibilities, to ensure that the client obtains their favoured outcome.
- Assist in loan applications: Assist clients with filling out and managing their applications for loans by providing them with practical assistance, such as provision of relevant documentation and instruction on the process, and other advice such as any arguments they could bring forward to the lending organisation in order to secure the loan.
- Synthesise financial information: Collect, revise and put together financial information coming from different sources or departments in order to create a document with unified financial accounts or plans.
- Analyse business plans: Analyse the formal statements from businesses which outline their business goals and the strategies they set in place to meet them, in order to assess the feasibility of the plan and verify the business’ ability to meet external requirements such as the repayment of a loan or return of investments.
- Examine mortgage loan documents: Examine documents from mortgage borrowers or from financial institutions, such as banks or credit unions, relating to a loan secured on a property in order to examine the payment history of the loan, the financial state of the bank or borrower, and other relevant information in order to assess the further course of action.
- Check accounting records: Revise the accounting records of the quarter and year and ensure that the accounting information reflects with accuracy the financial transactions of the company.
- Communicate with banking professionals: Communicate with professionals in the field of banking in order to obtain information on a specific financial case or project for personal or business purposes, or on behalf of a client.
- Provide support in financial calculation: Provide colleagues, clients or other parties with financial support for complex files or calculations.
- Assess mortgage risk: Assess whether the borrowers of a mortgage loan are likely to pay back the loans in a timely manner, and whether the property fixed in the mortgage is able to redeem the value of the loan. Assess all the risks involved for the lending party, and whether it would be beneficial to grant the loan or not.
- Advise on financial matters: Consult, advise, and propose solutions with regards to financial management such as acquiring new assets, incurring in investments, and tax efficiency methods.
- Manage loan applications: Manage the application process for loans from the process of interviewing the applicant and reviewing the documentation, assessing the risks, and accepting or denying the loan and ensuring compliance with the underwriting process.
- Assess customer credibility: Communicate with customers to assess whether their true intentions are in line with what they claim in order to eliminate any risks from a potential agreement with the customer.
ISCO group and title
3312 – Credit and loans officers
References
- Loan officer – ESCO
- Loan Officers : Occupational Outlook Handbook – U.S. Bureau of Labor Statistics
- Loan Officer Job Description: Salary, Skills, & More – Liveabout.com
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