Getting Accredited For A Career In Credit Analysis

A career in credit analysis focuses on assessing the creditworthiness of individual or institutional loan applicants through quantitative analysis of their financial data. Credit analysts are in demand by a wide range of companies from commercial banks and credit rating agencies to retail outlets and investment banks.

Obtaining professional certification provides an additional level of expertise to professionals working in credit analysis and can improve their job prospects and increase their pay. Below are five professional certifications that are useful for those pursuing a career in credit analysis.

Credit Risk Certification (CRC)

Credit risk management professionals work in the financial services industry, measuring and managing retail, commercial, and corporate credit risk to improve the financial stability of their clients.

Credit risk certification is a professional designation that has been granted by the Risk Management Association since 2002.

Financial services professionals who work in the areas of credit risk, market risk, and operational risk and who have at least five years of relevant work experience should consider CRC.

Professionals who want to obtain the CRC designation must become active members of the Risk Management Association and complete 45 units of continuing education activities, such as taking relevant courses and attending professional events, every three years.

Certification requires applicants to pass the CRC exam. The exam covers seven broad areas of credit risk assessment, including accurately assessing a business's financial condition, the strength and quality of its cash flow, the value of its collateral, and its sources for loan repayment.

Applicants should be well-versed in financial statement and tax-return analysis, financial accounting, and commercial credit.

The RMA recommends 40 to 80 hours of study and a practice exam to prepare for the five-hour, 120 multiple-choice question CRC exam. The exam is administered online during two testing windows, one in the spring and one in the fall, and each window is open for about two months. 

Certification Requirements and Costs

The exam fee is $495. The practice exam costs $25.

Recertification, which is required every three years, costs $100, and applicants may want to purchase exam study materials.

RMA membership costs $295 a year.

Thus, CRC certification has a minimum up-front cost of around $550 and ongoing costs of several hundred dollars a year for additional study materials.

Professional Certificate in Credit

The New York Institute of Finance, a financial training company owned by Pearson, offers a professional certificate in credit. It requires individuals to take four core courses out of a choice of 12 and two elective courses out of a possible seven.

Courses cover topics such as credit risk analysis, financial statement analysis, cash flow, and credit derivatives. The program offers day courses, evening courses, and online courses. The prices of courses vary widely from under $100 to thousands of dollars.

Successful completion of all courses within a three-year period is all it takes to earn this certificate. Instructor-led courses require 80% attendance to pass and online courses require a grade of at least 70% to pass.

Credit Business Associate (CBA)

Credit Business Associate is a professional designation granted by the National Association of Credit Management (NACM).

CBA professionals work in the credit management industry, and CBA certification indicates expert knowledge in basic financial accounting, business credit principles, and introductory financial statement analysis.

The CBA designation does not have a work experience requirement, which makes it an accessible option for people just starting a career in credit management. Instead, this designation requires an educational background that can be attained through college coursework, self-study, or NACM coursework.

The equivalent of a semester's worth of study is required in just three courses: Basic Financial Accounting, Financial Statement Analysis I, and Business Credit Principles. End-of-course certificates, official transcripts, or grade reports are required to show satisfactory course completion with a grade of C or better.

In addition to meeting the education requirement, getting certified requires passing the CBA exam. This three-hour exam consisting of 125-150 true/false and multiple-choice questions. The exam also may require applicants to prepare a balance sheet, an income statement, a statement of cash flows, or a common size analysis.

The test is administered three times a year, in May, July, and November.

To prepare, the NACM recommends four textbooks on principles of business credit, accounting, financial statements, and credit management. It also provides an outline of specific content to study. An optional, free, one-hour practice exam is available on the NACM website.

Certification Requirements and Costs

The certification process requires individuals to submit a CBA application, which mainly asks for information on the applicant's educational background. The fee is $235 for NACM members and $470 for nonmembers. The application fee covers the exam.

Additionally, applicants must submit a professional resume, transcripts, and NACM Career Roadmap form (described in the following section). There is no continuing education requirement.

Other costs associated with becoming a CBA include tuition and fees to complete the required coursework and the cost to purchase course textbooks and exam study materials. There also is a fee of $175 for members or $350 for nonmembers to establish your personal file with the NACM-National Education Department.

Credit Business Fellow (CBF)

CBF is a professional designation granted by the NACM to professionals working in credit management. It builds upon the CBA designation, which is required to earn the CBF designation, by adding further coursework and a work experience requirement.

CBF certification is an indicator of professional experience and expert knowledge in business law, credit law, financial statement interpretation, and credit risk assessment.

Credit management professionals who have earned at least 75 Career Roadmap points are eligible for CBF certification.

Certification Requirements and Costs

Applicants must pass the CBF exam to become certified, and the NACM's National Education Board must first grant the applicant approval to take the exam.

The three-hour exam covers business law, credit law, financial statement interpretation, and credit risk assessment. It is administered three times a year, in May, July, and November.

The NACM recommends three textbooks covering the subject matter to prepare for the exam. An optional, free, one-hour practice exam is available online at the NACM website.

The certification process also requires individuals to submit the CBF application, which is very basic as they previously completed the more detailed CBA application.

The application and exam fee is $285 for NACM members and $570 for nonmembers. Retakes are $99.

Other costs associated with becoming a CBF include all the fees associated with first becoming a CBA, the tuition and fees to complete the required CBF coursework, and the cost to purchase CBF course textbooks and exam study materials.

Certified Credit Executive (CCE)

CCE is an executive-level professional designation granted by the NACM.

It can be earned in one of four ways, each requiring a specific combination of education or work experience.

• Plan A requires a four-year college degree, 10 years of professional credit management experience, and 125 Career Roadmap points. (See CBF section, above, for work experience that earns points.)
• Plan B requires the CBA and CBF designations, 125 Career Roadmap points, and submission of a resume.
• Plan C requires 15 years of professional experience and 125 Career Roadmap points. It is available only to applicants age 57 or older.
• A fourth option allows individuals who have successfully completed the second year of the Graduate School of Credit and Financial Management program to take the exam.

CCE certification is an indicator of professional experience and expert knowledge in accounting, finance, domestic and international credit concepts, management, and law.

Applicants must pass a four-hour CCE exam that the NACM says "measures a candidate's ability to apply concepts to situations or explain how they relate to the field of business credit."

Each CCE exam can vary in length and scope, but it normally has two sections: one section has short answer and essay questions and the second is a case study. Each section is worth 50 points and a score of at least 70% is required to pass the exam.

The NACM recommends five textbooks covering the subjects. The test is administered three times a year, in May, July, and November. There is no practice exam. 

Certification Requirements and Costs

The certification process requires individuals to submit a CCE application and pay an application and exam fee of $385 for NACM members and $770 for nonmembers.

The CCE requires recertification every three years until age 60, or until age 55 and official retirement. Recertification costs $175 and requires the completion of six recertification points from educational courses or participation in approved NACM and professional activities.

Other costs associated with acquiring and maintaining the CCE designation include tuition and fees to complete the required coursework and the costs of textbooks and exam study materials.

There is also a one-time fee of $175 for members or $350 for nonmembers to establish your personal file with the NACM-National Education Department, if you do not already have one.

Which One?

When deciding which designation to pursue or whether to pursue a designation at all, it's important to evaluate whether the time and money invested are likely to bring you returns in the form of a more robust career.

As with any continuing education, you need to consider whether the knowledge will benefit you and whether the designation is widely recognized and respected in your field.

It's helpful to talk to senior professionals in your field to get an idea of which certifications might benefit you most.