One finance field that the world learned about during the global financial crisis that has implications for every person wanting to buy a house, get a loan or make an investment is credit analysis. A credit analyst reviews and assesses the financial history of a person or company to determine if they are a good candidate for a loan. In other words, credit analysts determine the risk of default to the bank or lender.

Many times a credit analysis does not just provide a simple “yes or no” answer, but the analysis may lead to a “yes, but …” answer. Someone seeking a loan may qualify for the loan, but with specific conditions, such as a higher or lower interest rate (depending on repayment history and credit score), with a specified level of collateral or certain contingencies, such as requiring that bank accounts do not fall below a certain level. Because there are many variables involved with these decisions, credit analysts are required to have a certain level of education, and for that, they receive commensurate compensation.

Education and Training

The responsibilities of a credit analyst include evaluation of financial data, such as balance sheets and income statements to determine the level of default risk, and preparation of a report for both the client and the lender. This evaluation includes calculating certain financial ratios to help the lender make comparisons. These responsibilities necessitate that credit analysts receive at least a bachelor’s degree, ideally in finance, accounting, economics or mathematics (notably statistics). Many credit analysts’ initial work experiences are in the areas of accounting, accounts receivables/payables or loan application processing.

Credit Analyst Salary

Credit analysts can work in a variety of fields and locales. Many work for lending institutions like banks or insurance companies. Additionally, there is great demand in investment, working for an asset manager or private equity firm as a bond analyst or for rating agencies like Moody’s or Standard & Poor's, determining the riskiness of investing in a company or country. The salary range that credit analysts receive reflects the plethora of opportunities. According to numerous public websites, the annual salary for credit analysts is broad and ranges between $34,834 and to $112,328 and is dependent upon the level of experience, type of industry, and geographic location.

The following chart from Sokanu.com details the various salaries based on experience levels. These salaries increase for investment jobs and those in metropolitan areas like New York City.


Highest


The top 10% of Credit Analysts in the United States earn:



$112,328



Senior


The top 25% of Credit Analysts in the United States earn:



$78,690



Experienced


The middle 50% of Credit Analysts in the United States earn:



$58,657



Junior


The bottom 25% of Credit Analysts in the United States earn:



$43,159



Starting


The bottom 10% of Credit Analysts in the United States earn:



$34,834


The Bottom Line

Credit analysts typically work in a pressured environment where their research leads to a decision to grant a loan or to make an investment. It takes a certain confidence to have conviction in the analysis and make a sound decision, and analysts are duly compensated.