A job in credit analysis carries with it lots of responsibilities. Generally, credit analysts are responsible for assessing the creditworthiness of a loan applicant. These applicants may be individuals or businesses, depending on the field the credit analyst is working in.
Typically, credit analysts are employed by investment companies, credit rating agencies, credit card issuing institutions, commercial banks, and investment banks. Before applying for this type of position, it’s important to determine if you are able to shoulder this type of responsibility.
What Does a Credit Analyst Do?
Credit analysts gather and analyze financial data, then recommends a course of action for their customer. For example, if an analyst is working or an organization that issues credit cards, like a bank, they would collect information about clients who have defaulted on their debt.
After they analyze the data, the analyst may recommend reducing the client’s credit line or closing their account. Credit analysts don’t just monitor clients who have defaulted on their payments. They are also responsible for analyzing the credit worthiness of a person seeking new credit, or a current client who is being considered for a credit line extension or increase – this piece from Harnham goes into detail of what they do. The work is somehow similar to the work of investment professionals like Philip Rodrigs, who check the investment potential of different opportunities for their customers.
What Are the Educational Requirements for a Credit Analyst?
The minimum educational requirement for a credit analyst position is a bachelor’s degree in accounting, finance, or a related field. A person who completed a bachelor’s degree program in accounting or finance would have been exposed to subjects like financial statement analysis, industry assessments, economics, calculus, ratio analysis, statistics, and the basics of accounting and finance.
These subjects can aid a person in risk assessment which is a necessary skill for a credit analyst. Other subjects like ratio analysis and industry analysis are needed because assessing risk for a company includes assessing its environment.
While a bachelor’s degree comes in handy when working in credit analysis, some companies do not require it. Some companies and banks provide their employees with on-the-job training. These credit analysists do not need to have a finance-related degree.
These companies may require applicants to have some work experience in a finance or accounting related industry or a graduate degree in a business-related field. Depending on the position, a company may require that an analyst has a Chartered Financial Analyst (CFA) designation.
Other Required Skills
Some of the required skills for a credit analyst includes:
Diligence: You must be able to pay close attention to detail. Any missed piece of data or information can lead to an incorrect analysis of a customer. This may potentially cause costly problems for their clients.
Quantitative Analysis Skills: An analyst needs to be able to create or view a set of numbers and know what they mean for each individual client. They must also be able to analyze the relationship between those numbers in order to create an accurate analysis of the data.
Oral and Written Communication Skills: You need to be able to disseminate information about their decisions to various people in an efficient and effective way, whether in print or orally. You can’t just come up with the solution to a problem, you also have to be able to communicate the problem and solution to others.
Industry Knowledge: You may be assigned to work with firms and companies that operate in a particular industry. An understanding of the ins and outs of that industry can be useful. If you don’t know many types of industries, make sure to do some research before your interview.
Prioritization and Multitasking Skills: You must be able to prioritize their projects effectively, since they may be assigned to work with different clients at the same time. Each of these clients may have multiple projects to work on. You must know how to determine which client projects need to be handled first.
Experience with Financial Software: You must be comfortable with the financial software used to analyze data, including Microsoft Excel. These programs are an important means of gathering and analyzing data.
Benefits of Being a Credit Analyst
One of the major advantages of being a credit analyst is your ability to work in various types of companies. A credit analyst does not have to work for a credit rating agency or bank. They can work for any type of company that offers financing, to individuals and businesses, for their services or products. That means there are employment opportunities for credit analysts with retail stores, energy companies, utility companies and automobile manufacturers.
Another benefit is that credit analysts can move into more exciting, and higher paying, positions, such as loan and trust manager, portfolio manager, and investment banker. According to Salary.com, the average income for a credit analyst with a bachelor’s degree is $34,000 to $57.000. That’s a pretty solid wage range for this sector.
While credit analysts seem to have an east and lucrative job, it is also a very stressful one. Credit analysts have a lot of responsibilities. As a credit analyst, you make the decision about the interest rate on a person or company’s loan. You determine whether or not a person gets their credit line or how much loan money they will receive.
A credit analyst has a huge responsibility. That’s why the decision to become a credit analyst is not one that should be taken lightly. This can be a lucrative job that can lead to higher paying positions in the financial sector. However, just like any other position, it requires a lot of hard work.