Credit brokers connect consumers and business customers with lending institutions that can provide lines of credit.
A credit broker works to connect an individual consumer or business seeking a line of credit with a business, such as a bank or other lending institution, that can provide a line of credit. All types of credit are handled by credit brokers, including business loans, mortgages, automobiles, and personal consumer credit. A broker acts as an intermediary between banks and individuals or companies and is used in competitive financial markets to qualify loans with the most suitable lending institution.
A credit broker can work with a client during all aspects of the loan process.
A broker’s job is a combination of sales and marketing, with the goal of the broker finding customers in need of loans and then proceeding to qualify the customer through the application process. A loan broker can work with a client on all aspects of the loan process, including application paperwork and negotiating fees and interest rates. The direct role of a broker can vary by region, as some countries, such as the UK, have specific regulations on what a broker can and cannot do. As a result, in some areas, a broker functions more as an advocate for the customer during the loan approval process, rather than a direct seller of the loan itself.
Individuals and corporations often choose to work with a credit broker to find the best lender and navigate the technical aspects of the loan application process. For this, a credit broker earns a commission, usually a percentage of the loan that varies depending on the amount and type of the loan itself. This fee structure is regulated in some regions, but not all, and is usually agreed upon early in the loan process. Brokers can find business and consumer loans as they have connections with lenders and access wholesale credit markets to find the most competitive loan rate. A loan broker differs from a loan officer in that the broker is an independent third party who is not directly employed by the bank or lending institution offering the loan.
A college degree, usually in an area such as finance, economics, or business, is generally required to work as a credit broker. Some companies also require a master’s degree. The job is office based and may include frequent travel for client meetings and interaction with creditors. A typical 40-hour work week can be observed, although overtime is normal depending on workload and circumstances.