A credit broker works to connect an individual consumer or business looking for a line of credit with a company such as a bank or other lending institution that can provide a credit line. All types of credit are handled by credit brokers including business loans, mortgages, automobiles, and personal consumer credit. A broker serves as an intermediary between banks and individuals or companies, and is used in competitive financial markets to qualify loans with the most appropriate lending institution.
The job of a broker is a combination of sales and marketing, with the aim of the broker being to find clients that need loans and then proceed to qualify the client through the application process. A credit broker may work with a client through all aspects of the loan process, including the paperwork for the application and the negotiation of fees and interest rates. The direct role of a broker may vary by region, as some countries such as the United Kingdom have specific regulations in place for what a broker may and may not do. As a result, in some areas a broker works more as a client advocate during the loan approval process instead of directly being a salesperson for the loan itself.
Individuals and companies generally 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 generally agreed upon at the start of the loan process. Brokers are able to find loans for consumers and businesses, as they have connections to lenders and access to wholesale credit markets to find the most competitive lending rate. A credit broker is distinct from a loan officer, as the broker is an independent third party not directly employed by the bank or lending institution offering the loan.
A college degree, typically in a field such as finance, economics, or business, is usually necessary to work as a credit broker. Some companies also require a masters degree. The work is office based, and may include frequent travel time for client meetings and interaction with lenders. A usual 40 hour work week may be observed, though extra hours are normal, depending on workload and circumstance.
