The responsibilities of the credit analyst include analyzing credit data and financial information of persons or companies that are applying for credit or loans to determine the risk that the bank, or other lending or credit-granting institution will not recoup funds loaned. The level of risk is then used to determine if a loan or line of credit will be granted, and if so, the terms of the loan, including interest rate. Credit analysts will prepare reports based upon their findings to help make decisions on lending and credit-worthiness.
The Bureau of Labor Statistics (BLS) states that as of May 2011, there were 59,140 credit analysts employed in the United States. Employment trends show that credit analysts have a bright future, both in the banking industry and in maintaining the financial health of businesses.
Job Description for Credit Analysts
A credit analyst’s job description can vary depending upon employer. However, some of the typical responsibilities involved in credit analyst jobs include:
- Evaluating clients’ credit data and financial statements in order to determine the degree of risk involved in lending money to them
- Preparing reports about the degree of risk in lending money to clients
- Analyzing client records and using the data to recommend payment plans
- Conferring with credit associations and references to exchange credit information on clients
- Evaluating the financial status of clients by producing financial ratios through computer programs
- Filling out loan applications and including the credit analysis and loan request summaries, then submitting these loan applications to loan committees for their approval
- Helping supply chain and sales and marketing departments in managing financial orders to help them control credit exposure, make payments on time, and reduce the risk of customer disputes
- Conferring with clients to verify their financial/credit transactions and to resolve their complaints
How to Become a Credit Analyst: Education Required for Credit Analysts
Credit analysts need at least a bachelor’s degree in order to break into the field. This degree should be in a field, such as finance, accounting, or business. Areas of study that credit analysts will need to be familiar with include:
- Ratio analysis
- Financial statement analysis
- Risk assessment
After obtaining a bachelor’s degree, it is a good idea to gain work experience in the financial world prior to applying for a position as a credit analyst. Areas in which work experience is deemed the most valuable for future credit analysts include:
- Accounts receivable
- Credit application processing
Certification Options for Credit Analysts
Once one has completed the four-year degree and gained some work experience, the option of certification is available. While not necessary, some employers prefer to hire certified credit analysts over non-certified ones. The National Association of Credit Analysts (NACA) offers a credit analyst training course and examination that leads to certification. Options include:
- Certified Specialist in Credit Analysis (NACA-CSCA) Level 1: intended for entry-level credit analysts with no experience. One must complete 12 hours of online classes in the fundamentals of credit analysis, pass a background check, maintain ethical standards, and maintain membership in NACA to receive this credential.
- Certified Specialist in Credit Analysis (NACA-CSCA) Level 2: targeted at entry-level credit analysts with no experience. One must complete 24 hours of online classes in the fundamentals of credit analysis, pass a background check, maintain ethical standards, and maintain membership in NACA to receive this credential.
- Certified Specialist in Credit Analysis (NACA-CSCA) Level 3: a program for both entry-level and experience credit analysts consisting of 36 hours of online classes. One must also pass a background check, maintain ethical standards, and maintain membership in NACA to receive this credential.
Career Options for Credit Analysts
Because of the broad nature of their educational preparation and experience, credit analysts have the potential to work in a wide variety of financial careers. Credit analysts must be good decision makers and have a wide knowledge of the financial industry, making them perfect choices for promotions to positions such as Chief Executive Officer. Credit analysts may work in the following areas:
- Deposit credit intermediation
- Commercial credit analysis
- Non-deposit credit intermediation
- Managing companies/enterprises
- Monetary authorities /banks
- Lessors of real estate
- Financial investment activities
- Securities and commodity contracts intermediation and brokerage
- Agencies, brokerages and other insurance related activities
- Automobile manufacturers/dealers credit and loan departments
- Retail store credit departments
- Company/corporation credit departments
Salary and Employment Information for Credit Analysts
According to the Bureau of Labor Statistics (BLS), available positions in the finance sector, including credit analyst jobs, are expected to increase by 10 to 20 percent from 2004-2014. Most credit analysts are employed by banks, credit rating agencies, investment companies, and corporations.
The national annual mean salary for credit analysts as of May 2011 was $69,640, per BLS statistics. Those earning in the 75th percentile made $83,210; and those earning in the 90th percentile, $115,240. California leads the pack in the number of credit analysts it employs, at 5970 in May 2011. The highest-paying state in which credit analysts worked in May 2011 was New York, where they made an annual mean salary of $104,970.