Credit Analyst Jobs
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The average value of the Bachelor degree needed to become a Credit analysts is $1,233,529.00.
Points of Interest
Due to the economic downturn, stricter credit requirements, and the increase in banking regulations, careers in credit analysis are expected to grow over the next few years. -A bachelor degree in accounting, finance, or a related field is helpful, an often credit analysts are trained on the job. -Credit analysts work in a variety of institutions, including commercial and investment banks, credit card companies, and credit rating agencies.
Nature of Work
A career in credit analysis includes analyzing financial information and other relevant data to determine credit worthiness. It also involves using this information to prepare reports to be used in decision making.
General
Credit analysts spend a great deal of time "crunching numbers." Most often, as financial information arrives in the form of financial statements or tax returns, the data is entered in to a spreadsheet program. This program then compiles the financial data into a comparative format with previous years, as well as calculating ratios that can be used in the analysis process. Once the data is analyzed, a narrative report is written based on the information in the spreadsheets and other information received, to be used by decision makers. Often these reports include analyst’s comments, as well as a recommendation by the credit analyst regarding credit worthiness.
Responsibilities
The credit analyst is responsible for analyzing financial information and compiling into a format useful for decision making, and is often times called upon to make a recommendation. This is a heavy load to carry, and requires due diligence in making sure all information has been received. The credit analyst must be able to anticipate questions from decision makers and do whatever possible to receive all information necessary to answer such questions before hand. This includes but is not limited to credit reports, payment histories, and current debt service requirements. A credit analyst must always be aware of the information being reviewed, and recognize questions that need to be asked. For example, though a potential customer may state they have no other debt, there may be debt listed on a financial statement or credit report that he or she has forgotten to mention. The customer must then be questioned about this and asked for current information regarding it to ensure that the analysis is complete.
Training and Other Qualifications
Education
Generally, a minimum of a Bachelors degree in accounting, finance, or related field is required. A background in either of these fields offers exposure to statistics, financial statement analysis, ratio analysis, and industry assessment, each of which aids in risk management. On the job training is also usually provided, whether in house or outsourced. This often focuses on ensuring the credit analyst is up to date on current regulations and trends in the market.
Experience
It is helpful to have experience in the industry. For example, a bank examiner, loan assistant, or even intern in a credit analysis department can be useful experience.
Accreditations
Although not usually required, achieving accreditation can give and edge in the employment market.
Certified Credit Analyst (CCA) The Academy of Banking and Finance offers licensure as a Certified Credit Analyst. The program consists of 3 levels, each including a lecture series ranging from two to four days with an exam at the end. At the end of the level 3 lecture series there is an oral exam. When the program began in 2006, 179 participants began the program at level 1. To date, 16 of these have completed the entire program and received certification.
Credit Risk Certification (CRC) This accreditation is offered by The Risk Management Association (RMA). It involves written study materials provided at registration, and seminars that can be streamed online to prepare for the exam. There is a checklist online for the student to determine on his or her own whether or not they are prepared to take the exam. To receive certification, one must receive a passing score on the exam, have at least 5 years of experience in commercial credit and lending or loan review, and agree to complete 45 hours of continuing education every three years in order to maintain certification.
Chartered Financial Analyst (CFA) The broadest of the three certifications, this certification is offered by the CFA Institute. Similar to the CCA, it is achieved by passing a series of three exams. If the candidate passes all three exam levels, and meets certain ethical requirements, he or she is accepted as a member of the CFA Institute and thus becomes a "charter holder." This is a graduate level, self-study program that allows candidates to complete the program at their own pace. There is also no limit on the number of times each exam can be taken.
Other Skills
There are other skills that are vital to properly analyzing credit worthiness. A credit analyst must have quantitative as well as qualitative analysis skills. This means that one must be able to not only analyze the numbers and put them into a useable format, but also be able to discern what the numbers are actually saying about the potential client, and what that says about credit worthiness. It is also important to have knowledge of the industries being considered, or to know where to find reliable information if one is not familiar with the industry.
Written and oral communication skills are a must, as is the ability to multitask and prioritize. Of course, it is important to be able to use the financial and spreadsheet software being utilized as well.
Employment
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One of the great things about credit analyst careers is that you aren't limited to one particular type of institution. There are opportunities in commercial and investment banks, credit card companies, credit rating agencies, and investment companies. Any type of company that extends credit has the potential to want to hire a credit analyst. Though there may be some variation in the job requirements, the basics of credit analysis will be the same regardless of the employer.
Due to the current state of the economy, the outlook for credit analyst careers is very strong. Recently, there have been numerous new banking regulations passed, and bank examiners are becoming more diligent in making sure that banks are doing everything possible to make good lending decisions. This is leading more and more banking institutions to seek credit analysts to work internally. Also, credit requirements have tightened, requiring a more rigorous approval process, which has aided in creating a stronger outlook for careers in credit analysis.
Projections
This field of employment is expected to grow as fast as the average field or occupation according to recent studies.
Earnings
A credit analysts earnings will vary with the type of agency or institution that he or she works for. While some local banks my pay less, they may offer other benefits that are worth accepting less pay. However, a corporate investment company may offer high earnings and perks.
Earnings can also differ based on how the credit analyst position is viewed within the company. Some banking institutions view the credit analyst position as a stepping stone and training period for becoming a loan officer. Others view it as a separate career in its own right, and offer advancement within the credit analysis genre.
Wages
A credit analyst can expect to make between $28,000 and $110, 000, based on education, training, experience, and type of company.
Related Occupations
- Commercial Loan Officer
- Loan Officer
- Bank Examiner
- Loan Reviewer
- Financial Analyst
Sources of Additional Information
- Investopedia.com
Related Jobs
People with the educational background, skills, and desire to become a Credit analysts might be well suited to work in one of the following fields as well:
- Accountants and auditors
- Tax examiners, collectors, and revenue agents
- Financial examiners
- Securities, commodities, and financial services sales agents
- Financial analysts
- Personal financial advisors
