How to become A Credit Analyst

• Credit Risk Analyst

What do Credit Analysts do?

A Credit Analyst would typically need to:

• Assess the creditworthiness of existing or prospective clients
• Examine financial transactions and credit history, case by case, including applications, statements, balance sheets, and legal documents; analyze client records and use the data to outline findings and recommend payment plans
• Conduct statistical analysis to assess risk, using software such as SPSS and SAS/STAT; complete ratio, trend, and cash flow analyses; create projections and produce financial ratios through computer programs to evaluate the financial status of clients
• Confer with credit associations and references to exchange credit information on clients
• Determine in depth the degree of risk involved; make recommendations to reduce or control risk, which may involve an insurance strategy
• Deliver a multidimensional perspective on the investment outlook in an accessible and informative manner; produce clear and objective reports
• Fill out loan applications, including the credit analysis and loan request summaries; help to enhance the quality of credit applications; submit the loan applications to loan committees for their approval
• Use credit-scoring systems for small credit amounts such as small unsecured personal loans
• Assist the supply chain, 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
• Routinely monitor loans for compliance; reconcile credit files and identify discrepancies and variances; confer with clients to verify their financial/credit transactions and to resolve their complaints; liaise with underwriters and insurers
• Analyze the market position of a bank and run figures through complex modeling techniques to find value at risk (VAR) measurements
• Use financial packages and software, including portfolio management software, to monitor corporate portfolio asset quality on an ongoing basis
• Conduct thorough analysis of financial statements and assessment of credit requests, including new requests, changed requests, refinancing, and annual due diligence
• Adhere to credit policy and lending protocols of the organization; protect the organization’s assets and public image
• Develop and prepare spreadsheets and models to support analysis of new and existing credit applications
• Analyze periodic market patterns; track legislation and government policies; record anticipated economic environment changes; develop contingency plans to deal with emergencies

Work is mainly office-based, although Credit Analysts may need to travel and inspect companies that are being considered for investment or are extending their loan facility. Jobs tend to be available in cities and large towns. There may be opportunities to work overseas, particularly if a large international company employs you.

The dress code depends on the location, sector, size, and type of company you work with; adhere to business casual for the most part, unless otherwise specified.

The average working day ranges between eight and fourteen hours. Credit Analysts may also be required to work extra hours during critical situations or when deadlines are looming.

Competition for jobs is usually intense.Enhanced regulations and a more risk-conscious banking sector mean that organizations invest more heavily in their risk functions, creating more jobs in this area.

Self-employment and freelance work are options once you have gained considerable experience and built up your expertise.

Careers services and specialist recruitment agencies advertise vacancies in the online and print versions of newspapers and industry-related publications. Early applications for advertised vacancies prove helpful. It is advisable to network, undertake sector and company research, attend presentations, and send speculative applications.

Credit Analysts are generally employed by:

• Deposit Credit Intermediation Firms
• Commercial Credit Analysis Companies
• Non-depository Credit Intermediation Managing Organizations
• Monetary Authorities
• Banks
• Lessors of Real Estate, Financial Investment Activities and Securities and Commodity Contracts
• Intermediation & Brokerage Agencies
• Automobile Manufacturers & Dealers
• Credit & Loan Departments of Organizations
• Retail Store Credit Departments
• Company/Corporation Credit Departments

Professional associations and organizations are vital for Credit Analysts interested in pursuing professional development or connecting with like-minded professionals in their industry or occupation. Membership in one or more adds value to your resume while bolstering your credentials and qualifications.

• Intense levels of pressure, especially in corporate finance and investment banking
• The frequent occurrence of tight deadlines
• The need to stay updated on market trends and government legislation

A career as a Credit Analyst is more commonly open to high school graduates. It can take several years of work experience in a related field to become qualified enough to find employment as a Credit Analyst.

While having a bachelor's degree in a finance-related field comes in very handy, some companies do not require it. Without a degree, you will need considerable experience in finance or insurance, along with professional qualifications.

Some banks and companies provide on-the-job training to Credit Analyst employees who do not have finance-related degrees. On most occasions, these companies require some work experience in an accounting/finance-related field or a graduate degree in a business-related field.

Pre-entry quantitative experience in a finance or insurance setting over a significant period of time is useful. Areas in which work experience matters the most include accounts receivable, accounting, and credit application processing.

Relevant paid or voluntary experience gained via insight programs, job shadowing, work experience placements, and internships can be particularly beneficial. Many employers conduct internship programs to identify talented candidates.

Credit Analysts need at least a bachelor’s degree to break into the field. The following subjects may increase your chances: accountancy, economics, engineering, finance, insurance, law, mathematics, risk management, statistics. Larger employers are increasingly looking for degrees in finance, accounting, mathematics, or statistics.

Unlike accounting and finance, for which there are specific certifications such as CPA, there is no specific charter for a Credit Analyst. Some institutions may prefer applicants who have a Master of Business Administration (MBA) degree. Programs that cover topics such as the interest coverage ratio and creating and analyzing a debt schedule will give you an edge in the job market.

A postgraduate qualification, such as an MSc in finance-related risk management or financial markets, can improve your employment prospects, particularly if your undergraduate degree is in an unrelated subject.

You can also enter the profession through a graduate training program run by many larger finance organizations. Specific risk management training is sometimes included in these programs.

Once you complete the four-year degree and gain some work experience, the option of certification as an entry-level Credit Analyst is available to you. While certification is not essential, some employers prefer to hire certified Credit Analysts over non-certified ones.

Prospective Credit Analysts need a comprehensive knowledge of Microsoft Excel Suite and financial software used to analyze data.

Career progression is driven by performance, experience, and acquisition of professional qualifications. Employees with consistently high levels of performance may be eligible for promotion every two to three years.

Credible experience as a Credit Analyst can lead to higher and exciting career paths like Investment Banker, Portfolio Manager, or Loan and Trust Manager.

When you reach the top of the career ladder, you may work at a Senior Manager or Managing Director/Chief Executive Officer level. Credit Analysts can also move laterally into front-end roles such as Traders or Investment Managers.

Candidates with relevant experience and acquisition of professional qualifications will have the best job prospects.

Training is typically on the job and involves a judicious blend of in-house and external courses. You may also be required to undergo formal training sessions across multiple functions and departments.

Financial risk analysis is constantly evolving. You will need to undertake continuing professional development (CPD) to keep up to date with key issues such as legal, market risk, and compliance concerns. Employers will often support you in taking relevant examinations leading to industry-recognized qualifications.

Depending on the job level, a company might require a Credit Analyst to have a Chartered Financial Analyst (CFA) designation. Professional organizations offer online and real-time certified specialization in credit analysis at advanced levels.

Essential Academic Courses

A bachelor's degree in finance or accounting exposes you to subjects like basic accounting and finance, statistics, ratio analysis, calculus, economics, industry assessment, and financial statement analysis, which aid in risk assessment. Industry & ratio analysis helps you appraise a company’s environment as part of the process.

A Job with High Responsibility

Credit analysis comes with immense responsibility. Credit Analysts are charged with gathering and analyzing the credit data and financial information of loan applicants. They determine the risk that the bank or other lending or credit-granting institution runs in recouping the typically vast sums of money lent. The risk level determines the grant of a loan or line of credit and its terms, including the interest rate.

Assessment & Outcomes of Credit Applications

Credit Analysts evaluate gathered data using a range of criteria to assess and make decisions about customer credit applications, whether filed by firms or individuals. These include the purpose of the application, credit viability, customer payment history, and customer creditworthiness.

After evaluating the data collected concerning credit applicants, Credit Analysts recommend their customers a course of action. For example, a Credit Analyst who works with a bank or organization that issues credit cards collects and analyzes data about clients’ payment defaults. Accordingly, they might recommend closing the card or reducing the credit line.

Credit Analysts may also be responsible for potential customers seeking new credit or customers who are under consideration for credit line extensions.

Industry-Specific Understanding

Sometimes a Credit Analyst is assigned to work with companies and firms that operate in a particular industry. In such a case, in-depth understanding of a particular industry can come in handy. If you do not have knowledge about many industries, just be sure to do your research before showing up for an interview.

If you or someone in your family uses a credit card, a decision had to be made about whether you could be trusted to pay back the money you charge. That decision depends on the work of a Credit Analyst.

As a Credit Analyst, the decisions you make can determine the interest rate at which an individual or a company borrows, whether the client gets a loan or a credit line, and what amount they will receive. A Credit Analyst has enormous responsibilities, and the position should not be taken lightly. It can be a lucrative job, but it requires a lot of hard work. You are where the world comes to manage risk!

Better to have one too many anxious apprehensions than fall prey to and be ruined by too confident security.