Career Exploration Series: How to Become a Loan Officer

What Loan Officers Do
Loan officers evaluate, authorize, or recommend approval of loan applications for people and businesses.

Work Environment
Most loan officers are employed by commercial banks, credit unions, mortgage companies, and related financial institutions. Most commercial and consumer loan officers work full time, and many mortgage loan officers work very long hours. Except for consumer loan officers, traveling to visit clients is common.

How to Become a Loan Officer
Most loan officers need a bachelor’s degree and receive on-the-job training. Mortgage loan officers must be licensed.

Education
Loan officers typically need a bachelor’s 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 loan officers may be able to enter the occupation without a bachelor’s degree if they have related work experience, such as in sales, customer service, or banking.

Training
Once hired, loan officers usually 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. Those who use underwriting software often take classes to learn the company’s software programs.

Licenses, Certifications, and Registrations
Mortgage loan officers must have a Mortgage Loan Originator (MLO) license. To become licensed, mortgage loan officers must complete at least 20 hours of coursework, pass an exam, and submit to background and credit checks. Licenses must be renewed annually, and individual states may have additional requirements.

Several banking associations and schools offer courses or certifications for loan officers. The American Bankers Association and the Mortgage Bankers Association both offer certification and training programs for loan officers. Although not required, certification shows dedication and expertise and thus may enhance a candidate’s employment opportunities.

Other Experience
Employers may prefer candidates who have work experience in lending, banking, sales, or customer service. For those without a bachelor’s degree, work experience in a related field can be particularly useful.

Important Qualities

Decision-making skills. Decision-making skills are important for loan officers, who must assess an applicant’s financial information and decide whether to award a loan.

Initiative. Loan officers need to have initiative when seeking out clients. They often act as salespeople, promoting their lending institution and contacting firms to determine their loan needs.

Interpersonal skills. Because loan officers work with people, they must be able to guide customers through the application process and answer their questions.

Pay
The median annual wage for loan officers was $59,820 in May 2012. Some loan officers are paid a flat salary; others are paid on commission.

Job Outlook
Employment of loan officers is projected to grow 8 percent from 2012 to 2022, about as fast as the average for all occupations. The need for loan officers fluctuates with the economy, generally increasing in times of economic growth, low interest rates, and population growth—all of which create demand for loans.