How to Become a Credit Analyst

Credit Analyst – Credit analysts are a critical part of the financial service industry. They work with credit card companies and banks to ensure that businesses are able to successfully manage their finances. Credit analysts use their skills and knowledge to study personal and business data, including information obtained from financial statements, credit reports, and advertising materials, in order to make decisions on how much credit they should provide consumers.

What Does a Financial Analyst Do? Job Responsibilities, A Day in the Life

Learn About Being a Credit Analyst

Credit analytics have become crucial in modern society as it is important for people to be financially capable. With this in mind, here are some helpful tips on what you need to know about becoming a credit analyst.

A credit analyst is someone who helps lenders and businesses assess the risk of lending money to individuals or businesses. Most often, they look at how likely it is that an individual or business will return the loan and if there are any debts owed by the borrower. A credit analyst can work for a lender, a bank, or as an independent contractor providing services to various companies. The field is competitive, but qualified candidates with a background in finance can find entry-level positions in many industries. If you’re interested in this career path, read on for more information about what it’s like to be a credit analyst.

What is Credit Analyst?

A credit analyst is someone who has the task of reviewing a person’s financial situation to decide if they are eligible for certain types of loans and/or credit cards. They may also review the financial information on a person’s existing credit accounts to see if they are paying them off as expected. In order to be considered for a loan or credit card, you will need to have a good credit history, which means you must pay your bills on time and not have too many late payments. A possible career option for someone interested in this field would be working at a bank or lending institution. These employers typically assess the risk involved with lending out money in order to protect themselves before making the loan. Credit analysts play an important role in helping lenders decide how much risk is worth it when it comes to these types of loans and whether or not they should provide them.

What does a credit analyst do?

Credit analysts are the people who assess the financial risk of companies through looking at different aspects in their business. They evaluate banks and other lending institutions, as well as how much credit they are willing to lend out. A credit analyst might find that a company has a large amount of unpaid loans and would then work with them to come up with ways to pay back the money owed in order to avoid bankruptcy. As part of their job, they will also be assessing new suppliers for new companies, providing that information so that investors can make an informed decision on whether or not to invest. To do this, credit analysts use data from various sources including the government, industry reports, trade associations, and lenders themselves.

A credit analyst is responsible for gathering and analyzing financial data to assess a new or existing loan applicant’s creditworthiness. After evaluating the data, the credit analyst determines the likely risk and recommends a course of action for the customer. These recommended actions can include approval or denial of a new credit account, interest rate or extension of an existing credit line. They often work on the computer and use software programs to help analyze and calculate the data.

Other duties include the following:

Enter, update and retrieve information for credit applications
Evaluate and determine credit worthiness of applicants
Perform cash flow analysis of businesses to determine the degree of risk involved in extending credit
Ensure compliance with lending protocols
Respond to inquiries from lenders
Review proposals and answer questions from junior team members
Assist with company and client audits

Average salary

Many credit analysts are full-time employees, though some may work part-time or as contracted employees. Salaries for credit analysts can depend on education, experience, additional skills and certifications.

Common salary in the U.S.: $59,805 per year
Some salaries range from $14,000 to $139,000 per year.

Credit analyst requirements

Obtaining a position as a credit analyst may involve certain requirements depending on the level of jobs for which you’re applying, including:

Education

A credit analyst is usually required to have at least a bachelor’s degree in finance, accounting or related discipline. Earning this degree provides you with knowledge essential for risk assessment, including statistics, economics, ratio analysis, calculus, industry assessment and financial statement analysis.

Some employers may not require a completed bachelor’s degree and will provide on-the-job training to employees without finance-related degrees. Typically, these companies require some work experience in an accounting or finance-related field.

Training

While the technical specifications for the job, such as risk assessment, are taught in a classroom setting, on-the-job training provides the specifics regarding the company’s specific needs and procedures.;

Credit analysts with relevant experience may transfer learned skills such as customer service and analytical thinking to work for a new employer.

Certifications

Industry certifications add validity to your qualifications and let current and future employers know that you’re a competent and trustworthy professional. There are dozens of certification programs that credit analysts can take to gain advanced knowledge of their career possibilities and job duties and test their professional skills. Here are some of the most common certifications for this profession:

Certified Credit and Risk Analyst (CCRA): Awarded by the National Association of Credit Management (NACM), the designation is academically-based and verifies mastery in the analysis and interpretation of financial statements and the ability to make informed credit risk assessments.
Chartered Financial Analyst (CFA): Administered by the American Academy of Financial Management, this advanced certification provides a model for quality professional practice and performance as well as demonstrates a professional’s dedication to the continuation of their education and skills. The CFA certification demonstrates proficiency and encourages continued professional development.
Certified Risk Analyst (CRA): This certification is awarded by the Global Academy of Finance and Management (GAFM), which is recognized throughout the industry as an objective and respected certifying body. The requirements for certification include completion of a GAFM-accredited course or a master’s degree in accounting or finance, along with three years of experience and an agreement to continuing education through GAFM. This credential must be renewed on an annual basis.

Skills

Credit analysts use a wide range of skills to succeed in this role. Some specific skills include:

Attention to detail: Credit analysts must possess the ability to pay extreme attention to detail, as even the smallest error can lead to an incorrect analysis of a customer and may cause potentially costly problems for the client involved.
Communication: A credit analyst must be able to effectively communicate decisions and solutions and the reasons for them to a range of people via email, telephone or in person. They must also maintain clear, respectful interaction with clients and lenders to gather and share information and ask questions to resolve problems.
Research and analysis skills: A credit analyst creates and studies sets of numbers and know exactly what they mean for each client. Sometimes a credit analyst is assigned to work with companies that operate in any given industry. For this reason, research may be appropriate to gain a detailed understanding of the industry.
Technical skills: A credit analyst has to be comfortable with word processing, spreadsheet, database and financial software to effectively analyze customer data. Basic office skills, such as the ability to use copiers, printers, scanners, fax machines and phones, are also necessary to complete day-to-day tasks.
Time management: Credit analysts must be able to efficiently but thoroughly work on multiple projects for multiple clients at once and prioritize these projects effectively.

Credit analyst work environment

Credit analysts generally work in a relatively fast-paced office setting with a standard 40-hour workweek. They use financial software programs daily to evaluate applicants’ financial health. Other characteristics of this environment include:

Sitting at a desk for extended periods of time
Analyzing financial data to determine expected profitability of loans
Completing loan applications, preparing credit analyses and submitting to loan committees for approval
Preparing contracts or other financial documents and reviewing for accuracy
Consulting with customers to verify financial and credit transactions

The education, skills and experience of credit analysts can be transferable in many industries. These professionals can offer their skills to the following:

Manufacturing
Government
Banking
Health care
Retail