What is a Loan Officer?

A loan officer evaluates applications for loans, does research on the potential borrower and determines whether the loan should be awarded or not. They keep the economy running as well as help people afford major purchases they need to make. Below is an outline of this occupation for students who may be interested in pursuing it.

Loan Officer Basics

Loan officers work with customers to award them loans for purchases they need or want to make. Some loan officers get to make the decision themselves and others simply recommend to management whether the loan should be approved or not. They are knowledgeable about the different types of loans and take the time to explain them to consumers as well as answer questions. Loan officers who decide on the risk level of a loan are known as underwriters. They examine and verify the applicant’s credit history and income level and may use underwriting software to reach a decision.

Types Of Loan Officer

There are several types of loan officers that specialize in different types of loans. Mortgage loan officers administer loans for the purchase of property. This can include residential or commercial property. Consumer loan officers award loans to individual people for purposes such as buying a car or for college tuition. Commercial loan officers specialize in working with loans to businesses. There are also loan collection officers, who deal with borrowers who do not pay. They are responsible for helping the borrower find a way to repay the loan or repossessing collateral, such as a car or a home, in order to recover the amount of the loan. Loan officers usually work at a financial or lending institution such as a bank.

Necessary Skills

Loan officers must have good interpersonal skills, as much of the position involves going over applications with potential borrowers, answering their questions and interviewing them. Loan officers must have a good understanding of both state and federal law in order to ensure all aspects of loan agreements are legal. Research skills are also a must, because every aspect of an applicant’s history may be an important factor in determining whether a loan should be awarded. Loan officers usually must have some level of sales ability, as they need to contact individuals and businesses in search of new clients. Finally, they must be comfortable making final decisions about awarding a loan and be extremely detail-oriented to ensure all information is gathered and taken into account.


Loan officers must have a bachelor’s degree, usually in a subject such as business or finance, according to the Bureau of Labor Statistics. However, it may be possible for experienced professionals to become loan officers without a degree. Experience in banking, sales or insurance underwriting may be enough to secure a position. Every type of loan officer usually receive some degree of on-the-job training. Mortgage loan officers are required to obtain a Mortgage Loan Originator (MLO) license. Requirements to be licensed include passing an exam, a background check and a credit check. Other types of loan officers may be certified by organizations, such as the American Bankers Association and the Mortgage Bankers Association, which demonstrates additional expertise and dedication to the profession.

Related Resource: Top 10 Best Online Master’s in Entrepreneurship Degree Programs

Loan officers make purchases possible for many people and help businesses grow and thrive. They also bring in revenue for financial institutions in order to keep not only that institution but the entire economy afloat. The job of a loan officer can be a very rewarding one for the right person.