Steps to Becoming a Loan Processor

We will provide the general steps one needs to take in order to become a loan officer-processor, the associated training, educational background, requirement or non-requirement of official certifications or licensing, and the average investments of time and money required.

With regard to education, although we have stated that a formal education may not carry as much weight as experience, most financial lenders have, at the bare minimum, their bachelor’s degree.

In exploring the academic requirements of loan officers, we find candidates greatly benefit from an education comprised of general subjects, business dealings, finance and economics, and simple basic human contact skills.

Hence, not only is it important to cultivate good people and sales skills, it is also necessary to gain a solid grasp of the lending process, the federal and state regulations which can impact interest rates, the volume of loans approved and processed, and the desirability of loans within the current economic climate.

Fortunately, various banking related associations and private schools have courses and programs available for loan officer candidates, as well as, established loan officers who wish to refresh their skills and update their current industry knowledge.

One example is the Bank Administration Institute (BAI), an affiliate of the American Bankers Association. Offering what is known as the “Loan Review Certificate Program,” the BAI program is purposefully designed for persons who review and approve loans, help to improve the quality level of reviews, and heighten the abilities of loan officers to make early detections where deteriorating loans are concerned.

BAI’s four step educational Loan Review Certificate Pogram, covering a range of lending issues and real life case studies, instills loan officer candidates with the skills and knowledge necessary to competently perform in the workplace.

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Broken down, the individual components of the program include:

Complementary to courses and programs, reading books and related literature, and staying abreast of industry related developments can help loan officer candidates stay vested in their work and familiar with the current economic environment. Such practices can help develop strong interpersonal skills and sustain honorable working relationships between loan officers and clients, as well as, loan officers and financial management superiors.

Furthermore, to enhance newer loan officers’ knowledge of the lending industry and acquaint them with new pools of potential clients, engaging in networking forums, as well as social functions is highly encouraged. Through such social meet ‘n greets, loan officer candidates may connect with persons in need of financial lending assistance.

Yes and no. While it is definitely true that with time under one’s belt, a loan officer will become more knowledgeable and comfortable with the overall process, it does not necessarily guarantee that they will remain vigilant in keeping up with industry changes and continue to be motivated in seeking out new prospective clients at the same time.

As an example, loan officers may determine the type of loan and accompanying credit terms best suited to a particular client. The loan officer may then explain the associated requirements and restrictions, and respond to questions about the positives and negatives of such an option, as well as, the possibility of alternative solutions.

Once convinced the option is the best for the client’s personal situation, the individual will then need to complete an application. It is at this point that the loan officer can begin to evaluate the applicant’s creditworthy status. Loan officers can quickly assess a client’s financial situation by use of computer software programs which, after processing the client’s information, are able to generate a score. (More on this later.)

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In the absence of a client’s credit history or should additional information be needed (typically in instances of commercial loans), loan officers may request further information, documentation, and clarification.