How to become A Loan Counselor

Loan Counselors, who help applicants assess their financial status as a criterion for loan sanction, have become an essential feature on the global economic stage.

• Accredited Financial Counselor
• Financial Health Counselor
• Personal Finance Counselor
• Certified Consumer Credit & Housing Counselor
• Certified Credit & Housing Counselor
• Certified Credit Counselor
• Credit Counselor
• Housing Counselor
• Certified Credit Consultant

What do Loan Counselors Do?

A Loan Counselor would typically need to:

• Offer guidance to prospective loan applicants who have issues qualifying for loans and collaborate with underwriters to speed up mortgage applications
• Use electronic databases to find prospective individuals or businesses who need loans and qualify for financial aid to cultivate their business
• Check the credit and property evaluations along with the financial status of the applicant; use the findings to figure out if the applicant’s available monthly income makes them eligible for the loan
• Meet with students to offer advice on available financial-aid grants while answering their queries
• Explain to clients the rules of a debt management program along with the pros and cons of using such services or creditor concession policies
• Persuade prospective clients to use the services of their institution
• Design and develop debt management and spending plans or budgets to help clients meet their financial goals; make sure they are compliant with legal standards and requirements
• Calculate the amount of debt and available funds to come up with the most feasible pay-off method and estimate time for debt liquidation
• Make sure the client understands that payment of high-interest or short-term loans is of primary importance to avoid unpleasant consequences such as bankruptcy or foreclosure
• Contact delinquent borrowers to obtain full payment or to negotiate guaranteed repayment plans
• Keep abreast of credit regulations and macroeconomic trends to analyse their impact on loan interest rates; supervise less experienced loan personnel, if necessary

Loan Counselors may work in an environmentally-controlled office environment or their home if it suits their chosen profession. It is rather a sedentary job that entails quite a few telephonic conversations and working in a team. Travel may be required to meet with clients at their home if you are employed by mortgage lenders. You may need to visit a place of business if you work for a commercial lender.

It seems like a typical 9-5 full-time job, but most Loan Counselors put in a lot more than 40 hours/week, especially if they are paid on a commission basis; their pay will increase incrementally according to the number of hours they work.

Finding a new job might seem challenging. Loan Counselors can boost their job search by asking their network for referrals, contacting companies directly, using job search platforms, going to job fairs, leveraging social media, and inquiring at staffing agencies.

Loan Counselors are generally employed by:

• Commercial Banks
• Colleges & Trade Schools
• Credit Unions
• Mortgage Companies
• The Data Processing & Hosting Industry
• Motor Vehicle & Parts Dealers
• Management of Companies & Enterprises
• The Securities, Commodity Contracts & Financial Investments Industry

Professional associations and organisations, such as the Association for Financial Professionals (AFP), are crucial for Loan Counselors interested in pursuing professional development or connecting with like-minded professionals in their industry or occupation. Membership in one or more adds value to your resume while bolstering your credentials and qualifications.

• Emotional stress due to inability in striking a balance between the needs of the clients and government laws regarding their current financial situation
• A sedentary profession including considerable time spent in telephonic conversations with existing or prospective clients
• The need to be exact and accurate while meeting strict deadlines may not match the financial compensation
• The intense professional competition requires a significant amount of expertise and experience

There are multiple ways to earn valuable work experience which helps you stand out in the job market. Aspirant Loan Counselors benefit from commercial awareness obtained through part-time or vacation work, a work placement, an internship or a year out in the industry.

Shadowing an expert will also give you a deep insight into the profession, as would experience in advisory, sales or customer service roles. Entry-level candidates will learn through performing some of the research and administrative work for senior colleagues and dealing directly with the latter’s clients.

Employers usually provide training and pay for qualifying examinations but bear in mind that you can study only outside working hours; fortunately, many courses offer distance learning opportunities.

Check with your education provider’s academic office. You may be hired as a part-time resident advisor or an assistant in the financial aid, admissions, student accounts or the registrar’s office.

Your basic academic requirements will vary according to the needs of your prospective employer. Some accept a high school diploma as long as you have the requisite experience. In contrast, others prefer a college certificate in banking & financial support services, financial planning & services or credit management.

An increasing number of Loan Counsellors realise that a bachelor’s degree in economics, finance, financial studies, accountancy, business management, or counselling helps them get entry-level jobs in banks and credit agencies.

Make sure your high school curriculum includes maths, statistics, economics, along with word processing and spreadsheet software.

Loan Counselors who work with mortgage banks and brokerages need a license to practice. They can choose from various licencing programs such as a Residential Mortgage Loan Originator (MLO) license and Residential Mortgage Originator or Servicer license. A credit and background check followed by twenty hours of coursework and an examination may be the standard prerequisites.

If you work for independent financial advisors (IFAs), you should get a driver's license, or if you already have one, you should renew it. That way, you will be able to travel and assist clients at their homes.

Depending on your location, you might need to pass accredited certification exams or fulfil the requirements of a professional credit association to prove your knowledge in banking practices and government regulations on lending.

Your entry into the field may be through entry-level roles such as a bank teller/clerk or a loan counselor position in a trade school, community college or providers of four-year academic programs.

Successful Loan Counselors with requisite educational qualifications and experience along with consistently high-performance levels may be eligible for promotion to positions such as Loan Supervisor or Head of Retail/Commercial Banking.

After working your way up to the role of Financial Institution Treasurer or Controller, you will reach a possible peak in your professional career by becoming Financial Institution Vice-President or President.

You can begin to acquire a curated list of clients as you gain more experience and branch out independently if you so wish.

Candidates who have exemplary communication, numeracy, and interpersonal skills, in addition to being tech-savvy and able to manage multiple projects successfully, will have the best job prospects.

Banks and financial firms offer on-the-job training lasting from a month to a year. They follow it up with regular checks to ensure that their Loan Counselors remain competent while adhering to standard regulations.

A postgraduate degree in higher education administration or finance will help you realise your aim to move into managerial roles or become a financial aid director.

If training is not forthcoming from your employer or if you are self-employed, be aware that Continuing professional development (CPD) will also help you continually upskill through professional activity or self-directed learning.

Training - A Preferred Option

Some loan counselling firms and banking associations do not require any prior work experience since they prefer to use customised training programs for new hires.

Payment Options

Depending on their place of employment, some Loan Counselors might receive an average monthly salary. Others may receive a monthly salary and an additional commission fee depending on the number of loans they invested in. And there are a few who earn just the commission fee. However, bonuses are standard for all Loan Counselors.

Potential Pros & Cons of Freelancing vs Full-Time Employment

Freelancing Loan Counselors have more flexible work schedules and locations. They have full ownership of the business and can select their projects and clients. However, they experience inconsistent work and cash flow, which means more responsibility, effort and risk.

On the other hand, a full-time Loan Counsellor has company-sponsored health benefits, insurance, and retirement plans. They have job security with a fixed, reliable source of income and guidance from their bosses. Yet, they may experience boredom due to a lack of flexibility, ownership, and variety. When deciding between freelancing or being a full-time employee, consider the pros and cons to see what works best for you.

More than half of the students in America are forced into student loan debt to finish college, with $37,500 being the average amount owed in 2020.

Financial stability is something we all want to achieve in our lives; Loan Counselors have the skills and knowledge to help their clients get their finances back on track while pulling them out of debt.

Ensure your client screening process is thorough. Gather a substantial amount of the previous bank and credit statements from potential clients before authorising a loan to make sure that they pay you back in full.