A credit analyst is responsible for assessing a loan applicant's ability to repay the loan and recommending that it be approved or denied. Credit analysts are employed by commercial and investment banks, credit card companies, credit rating agencies, and investment companies. They may also work in the credit departments of a wide range of companies.
What Does a Credit Analyst Do?
A credit analyst gathers and reviews financial data about loan applicants, including their payment habits and history, earnings and savings, and spending patterns. The credit analyst then recommends approval or denial of the loan.
- Credit analysts determine the creditworthiness of loan applicants.
- An undergraduate degree in business, accounting, or finance and familiarity with spreadsheet software are typically required.
- Credit analysis can be a pathway to other jobs in banking and finance.
The analyst may also be involved in reviewing problem accounts. For example, a credit analyst working at a bank that issues credit cards may review data about clients who have defaulted on their payments. The analyst might recommend closing the card or reducing the credit line. Alternately, an analyst might recommend that credit line extensions be given to customers with strong payment histories.
The minimum educational requirement for the position of credit analyst is usually an associate or bachelor's degree in finance, accounting, or a related field. Applicants should be familiar with basic accounting and finance, statistics, ratio analysis, calculus, economics, industry assessment, and financial statement analysis. An understanding of all of these subjects is necessary for anyone working in a job that requires risk assessment.
Some banks and companies provide on-the-job training in credit analysis to candidates who do not have finance-related degrees. They still may require work experience in an accounting or finance-related field or a graduate degree in a business-related field.
Many specialized industries need credit analysts. Do some homework in advance if you've got an interview at one of them.
Depending on the level of the job, a company might require that a candidate have a Chartered Financial Analyst (CFA) designation.
Other Required Skills
Some other skills that a credit analyst must possess include the following:
- Diligence: The job requires great attention to detail. As a credit analyst, any missing piece of information may lead to an incorrect analysis of a customer and a costly problem for the company.
- Quantitative Analysis Skills: A credit analyst has to be able to review or create a set of numbers and understand what they mean.
- Written and Oral Communication Skills: A credit analyst must be able to effectively report results and decisions orally or in writing.
- Industry Knowledge: For some jobs, a credit analyst may need specialized knowledge of a particular industry. If you line up an interview with a retail giant or an automaker, do some research in advance so that you can talk intelligently about the industry and its challenges.
- Multitasking and Prioritization Skills: A credit analyst needs to be able to work on multiple projects at the same time and prioritize them properly. This will be expected on the job.
- Experience with Financial Software: A credit analyst has to be comfortable using Microsoft Excel or similar software used to analyze numerical data.
Benefits of Being a Credit Analyst
Credit analysts are in demand in a wide range of businesses in addition to banks and credit rating agencies. Auto manufacturers, retail store chains, and even utilities and energy companies extend credit to their customers and hire credit analysts to help them do it.
The average salary for a credit analyst as of May 2018 was $82,300, according to the U.S Bureau of Labor Statistics.
Being a credit analyst can be a stressful job. It means you decide whether a person or a company can make a purchase, and at what interest rate. It's a big responsibility and should not be taken lightly.