The credit analyst is responsible for evaluating the loan applicant’s ability to repay the loan and recommending approval or rejection of the loan. 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 department of many companies.
What does a credit analyst do?
Credit analysts collect and review financial data about loan applicants, including their payment habits and history, income and savings, and expenditure patterns. The credit analyst then recommends approval or rejection of the loan.
- The credit analyst determines the creditworthiness of the loan applicant.
- Usually requires an undergraduate degree in business, accounting or finance and familiarity with spreadsheet software.
- Credit analysis can be a gateway to other jobs in banking and finance.
Analysts may also participate in the review of problem accounts. For example, a credit analyst working at a bank that issues credit cards might review data about customers who defaulted on payments. The analyst may recommend closing the card or reducing the credit limit.
Alternatively, the analyst may recommend extending credit lines to customers with a good payment history.
The minimum education requirement for a credit analyst position is usually an associate or bachelor’s degree in finance, accounting or related fields. Applicants should be familiar with basic accounting and finance, statistics, ratio analysis, calculus, economics, industry evaluation and financial statement analysis.
It is necessary for anyone engaged in work that requires risk assessment to understand all these topics.
Some banks and companies provide on-the-job training in credit analysis for candidates without a degree in finance. They may still need work experience in accounting or finance-related fields or a graduate degree in business-related fields.
Many professional industries need credit analysts. If you are in one of the interviews, please do some homework in advance.
Depending on the job level, the company may require candidates to have the title of Chartered Financial Analyst (CFA).
Other required skills
Some other skills that a credit analyst must possess include:
- Diligence: This work requires great attention to detail. As a credit analyst, any missing information may lead to wrong analysis of customers and cause costly problems for the company.
- Quantitative analysis skills: Credit analysts must be able to view or create a set of numbers and understand their meaning.
- Written and verbal communication skills: Credit analysts must be able to effectively report results and decisions verbally or in writing.
- Industry knowledge: For some jobs, credit analysts may need industry-specific expertise. If you are going to interview with a retail giant or car manufacturer, do some research in advance so that you can talk wisely about the industry and the challenges it faces.
- Multitasking and prioritization skills: Credit analysts need to be able to work on multiple projects at the same time and correctly prioritize them. This will be expected at work.
- Financial software experience: Credit analysts must be proficient in using Microsoft Excel or similar software for analyzing numerical data.
Benefits of becoming a credit analyst
In addition to banks and credit rating agencies, credit analysts also need a wide range of operations. Automakers, retail chains, and even utilities and energy companies provide credit to customers and hire credit analysts to help them do this.
This job can be a career path to an investment banker, portfolio manager, or loan and trust manager.
According to the US Bureau of Labor Statistics, as of May 2020, the average salary of a credit analyst is $86,170.
Credit analysts can be a stressful job. This means that you can decide whether a person or a company can buy and what the interest rate is. This is a major responsibility and should not be taken lightly.