A credit analyst is responsible for assessing a loan applicant's ability to repay the loan and recommending that it be approved or denied. 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 departments of a wide range of companies.
Key Takeaways
- Credit analysts determine the creditworthiness of loan applicants.
- An undergraduate degree in business, accounting, or finance and familiarity with spreadsheet software are typically required.
- Credit analysis can be a pathway to other jobs in banking and finance.
What Does a Credit Analyst Do?
A credit analyst gathers and reviews financial data about loan applicants, including their payment habits and history, earnings and savings, and spending patterns. The credit analyst then recommends approval or denial of the loan.
The analyst may also be involved in reviewing problem accounts. For example, a credit analyst working at a bank that issues credit cards may review data about clients who have defaulted on their payments. The analyst might recommend closing the card or reducing the credit line.
Alternatively, an analyst might recommend that credit line extensions be given to customers with strong payment histories.
Educational Requirements
The minimum educational requirement for the position of credit analyst is usually an associate or bachelor's degree in finance, accounting, or a related field. Applicants should be familiar with basic accounting and finance, statistics, ratio analysis, calculus, economics, industry assessment, and financial statement analysis.
An understanding of all of these subjects is necessary for anyone working in a job that requires risk assessment.
Some banks and companies provide on-the-job training in credit analysis to candidates who do not have finance-related degrees. They still may require work experience in an accounting or finance-related field or a graduate degree in a business-related field.
Note
Depending on the level of the job, a company might require that a candidate have a Chartered Financial Analyst (CFA) designation.
Other Required Skills
Some other skills that a credit analyst typically must possess include the following:
- Diligence: The job requires great attention to detail. As a credit analyst, any missing piece of information may lead to an incorrect analysis of a customer and a costly problem for the company.
- Quantitative analysis skills: A credit analyst has to be able to review or create a set of numbers and understand what they mean.
- Written and oral communication skills: A credit analyst must be able to effectively report results and decisions orally or in writing.
- Industry knowledge: For some jobs, a credit analyst may need specialized knowledge of a particular industry. If you line up an interview with a retail giant or an automaker, do some research in advance so that you can talk intelligently about the industry and its challenges.
- Multitasking and prioritization skills: A credit analyst needs to be able to work on multiple projects at the same time and prioritize them properly. This will be expected on the job.
- Experience with financial software: A credit analyst has to be comfortable using Microsoft Excel or similar software used to analyze numerical data.
Benefits of Being a Credit Analyst
Credit analysts are in demand in a wide range of businesses in addition to banks and credit rating agencies. Auto manufacturers, retail store chains, and even utilities and energy companies extend credit to their customers and hire credit analysts to help them do it.
The job can be a pathway to a career as an investment banker, portfolio manager, or loan and trust manager.
The average salary for a credit analyst as of May 2022 was $92,180, according to the U.S Bureau of Labor Statistics.
Being a credit analyst can be a stressful job. You often must decide whether a person or a company can make a purchase, and at what interest rate, which is a significant responsibility.
What Is Ratio Analysis?
Ratio analysis is the process of comparing two numbers as a percentage of each other. For credit analysts, ratio analysis is critical to helping them evaluate a potential borrower's credit worthiness. Credit analysts may review ratios like debt-to-income ratio or metrics on a company's financial statement to guide them in making lending decisions.
How Do You Get a CFA Designation?
To get certified as a charted financial analyst (CFA), you must complete three tests that test your competence and integrity. The tests are 4.5 hours long and are set by the CFA Institute. You must also complete 4,000 hours of real world experience within three years and commit to the CFA Institute's code of ethics.
What Is Risk Assessment?
Risk assessment as used by credit analysts is the process of evaluating a potential borrower's risk to determine whether to lend money. A number of factors can be included in a risk assessment, such as income, debt, payment history, and length of credit history.
The Bottom Line
The right career path for you will depend on a number of factor. If you enjoy working with numbers and making calculations, you may enjoy working as a credit analyst. In this job, you'd be responsible for evaluating an individual's or a company's creditworthiness and making lending decisions based on your analysis. Weigh all the pros and cons of this profession, which can entail long hours and certification requirements, to determine whether it's right for you.
FAQs
How Do I Become a Credit Analyst?
- Step One: Obtain a bachelor's degree in a relevant field such as accounting, finance, economics, or business administration.
- Step Two: Gain relevant work experience.
- Step Three: Develop financial analysis and credit analysis skills.
Pros of being a Credit Analyst:
Offers a good work-life balance with manageable work hours. Opportunity to develop valuable analytical and financial modeling skills. Potential for a range of future career opportunities in corporate finance, banking, or buy-side firms.
Do credit analysts make a lot of money? ›
The majority of Credit Collections Analyst salaries across the United States currently range between $46,000 (25th percentile) and $63,500 (75th percentile) annually.
What type of person makes a good credit analyst? ›
Credit analysts should be good at problem-solving, have attention to detail, and have the ability to research and document their findings. They should be able to understand and apply the terms used in finance, banking, and business.
What are the 5 C's of credit? ›
The 5 C's of credit are character, capacity, capital, collateral and conditions. When you apply for a loan, mortgage or credit card, the lender will want to know you can pay back the money as agreed. Lenders will look at your creditworthiness, or how you've managed debt and whether you can take on more.
What is the average salary for a credit analyst in the US? ›
The average credit analyst salary in the USA is $70,029 per year or $33.67 per hour. Entry level positions start at $50,555 per year while most experienced workers make up to $119,840 per year.
What is the average age of a credit analyst? ›
Demographic information on Credit analysts in the US. The workforce of Credit analysts in 2022 was 36,749 people, with 51.5% woman, and 48.5% men. The average age of male Credit analysts in the workforce is 37.9 and of female Credit analysts is 42.8, and the most common race/ethnicity for Credit analysts is White.
Can credit analysts work from home? ›
Many home-based credit analysts evaluate credit risk for specific Industries, including real estate and banking.
Can you be a credit analyst without a degree? ›
Most employers require their credit analysts to possess at least a bachelor's degree in either finance, economics, accounting, or a related discipline. Some employers may be open to hiring candidates with a different type of degree and providing in-house credit analyst training.
What is the daily life of a credit analyst? ›
Each day can bring different tasks and responsibilities. An Analyst's main focus may be completing a rush request for a client while another day will be filled with helping a mentee or attending team or social committee meetings. My day to day is mostly filled with underwriting credits for Key's clients.
For professionals looking to take the credit analyst career path, they need to obtain a bachelor's degree in business, finance or accounting, or at least an associated degree and relevant experience in a financial institution.
Do credit analysts work long hours? ›
Work Environment
Credit analysts can expect to work a 40-hour week, but they may have to put in overtime if a project has a tight deadline. A commercial credit analyst may have to travel to the business or corporation that is seeking a loan in order to prepare the agreement.
Is a credit analyst a stressful job? ›
Being a credit analyst can be a stressful job. You often must decide whether a person or a company can make a purchase, and at what interest rate, which is a significant responsibility.
How hard is it to become a credit analyst? ›
After earning a college degree, prospective certified credit analysts have the required education to apply for and complete a few years of work experience in junior or mid-level credit analyst roles. During this time, professionals gain onsite job training and learn how to complete the work of credit analysts.
Are credit analysts in demand? ›
The projected credit analyst job growth rate is -5% from 2018-2028. About -77,200 new jobs for credit analysts are projected over the next decade. Credit analyst salaries have increased 7% for credit analysts in the last 5 years. There are over 61,161 credit analysts currently employed in the United States.
Can I be a credit analyst without a degree? ›
It's not necessary to earn a graduate degree to pursue a job in this field. However, you might choose to return to school later to earn a master's degree if your employer prefers to promote those with this advanced credential. It's common for newly hired credit analysts to undergo a period of on-the-job training.
What does an entry level credit analyst do? ›
Gathers and analyzes loan applicants' financial data to evaluate risk. Assesses creditworthiness of individuals, companies, and institutions. Collaborates with other financial experts to approve or deny loans. Makes recommendations about whether to increase, adjust, extend, or close lines of credit.
How long does it take to become a credit analyst? ›
How long does it takes to become a credit analyst? It typically takes 4-6 years to become a credit analyst: Years 1-4: Obtaining a Bachelor's degree in a relevant field such as finance, accounting, or economics.
How do I start a career in analyst? ›
How to Become a Data Analyst (with or Without a Degree)
- Get a foundational education.
- Build your technical skills.
- Work on projects with real data.
- Develop a portfolio of your work.
- Practice presenting your findings.
- Get an entry-level data analyst job.
- Consider certification or an advanced degree.
