Credit Analyst Job Description
If you have always been fascinated by numbers, charts and graphs, you may have considered going into the world of finance. Accountants and other financial experts often spend years on their education before beginning work, but not everybody has that kind of time or money. If you are looking for a finance job that allows you to work closely with individuals or companies without spending an arm and a leg on college first, consider becoming a credit analyst. This full job description will help you determine if it is right for you.
What Is A Credit Analyst?
Credit analysts work in the financial industry. He or she is responsible for determining whether individuals or companies have the capital or collateral necessary to receive lines of credit. They decide how likely the borrowers are to repay the loans they receive by reviewing their credit history as well as other financial history in relation to current economic conditions. A credit analyst's findings may mean the difference between an individual or company borrowing enough to purchase property, or may just help them to get a higher spending limit on their credit cards.
What Type Of Education Does A Credit Analyst Need?
Although some credit analysts only graduate from high school and then do their training on the job, most have a bachelor's degree in accounting or another financial study that teaches them about ratio analysis, economics, risk assessment and financial statement analysis, among other areas of concentration. Of course, credit analysts must also have a strong understanding of financial techniques and accounting principles.
While accounting and finance fields require people to receive specific certifications, credit analysts do not need to meet such requirements. However, this does not necessarily mean that education for an analyst ends at a bachelor's degree. Depending on where someone wants to work, he or she may need to earn a Master of Business Administration or receive a designation, such as becoming a Financial Modeling and Valuation Analyst.
Even though certification is not required, it does give a prospective employee a leg up. Many analysts become certified through the National Association of Credit Analysts, which offers a program to become a Certified Specialist in Credit Analysis. The NACA-CSCA is available at levels one, two and three. The first and second levels are for entry-level analysts with the main difference being how long they spend in the online classes. Level three is for both entry-level and experienced credit analysts and requires more time in classes. Regardless of which level someone decides to become certified in, he or she will need to maintain ethical standards, be a member of NACA and pass a background check.
What Are The Duties And Responsibilities Of A Credit Analyst?
Credit analysts have many duties and responsibilities. Most importantly, they sit down with individuals of the appropriate department heads of a company to determine whether someone is eligible to receive a financial loan, which involves several steps.
First, analysts review the client's current financial situation to determine if he or she can pay current bills and still have the money left to repay a loan. Next, credit analysts review the client's past credit history, including unpaid debt, credit scores and whether he or she has ever filed for bankruptcy. All this information helps analysts to determine how much risk it will be for a bank or another financial institution to provide the client with a line of credit.
After meeting with clients and determining how risky it is to provide them with capital, credit analysts prepare a report to give to the financial institution that details their findings on the client's creditworthiness. If he or she determines that the client is not a financial risk, the credit analyst may help the client to fill out loan applications, including providing the full analysis and loan request summaries and submit them to the proper loan committees.
There are many other duties as well. Analysts must verify client references, answer their questions and complaints and respond to the questions or complaints of lenders as well. They must be proficient with computers and in using the necessary software and spreadsheets to determine and track risk analysis information. Most credit analysts use Microsoft software, although many other types do exist.
Analysts who work in corporate finance can also expect to work with the company's sales and marketing departments to manage their financial orders and assist them in making payments on time. Other tasks include ensuring approved applications meet lender criteria, assisting with audits and keeping up to date with any company or lender policy changes.
What Skills Does A Credit Analyst Need?
Naturally, a credit analyst must have strong mathematical and analytical skills. He or she should be able to quickly and easily do simple mental math as well as understand ratios, percentages and other important financial information. An analyst needs to weigh risk against reward and determine whether someone's past economic status outweighs his or her current financial situation. Analysts who wish to work for a specific type of client, such as a large corporation, will need to understand that corporation's industry and how it works.
Ethics is a large part of being a credit analyst. Someone wishing to enter the field must have a strong sense of ethics since he or she will be dealing with important credit and financial information for clients, which means the ability to keep their clients' financial information private and maintain strict confidentiality.
Overall communication skills are also important. Finances are a sensitive topic. Whether speaking with clients, financial institutions or potential references, a credit analyst must be diplomatic in demeanor and thorough in explanations, whether approving or denying credit applications.
Credit analysts must have excellent computer skills as well. Much of the workday is spent inputting financial information into software or spreadsheets to create charts and graphs detailing risk against reward.
What Kind Of Working Hours Does A Credit Analyst Have?
Most credit analysts have a typical office job, which means they work Monday through Friday and have weekends off. Normally, analysts work eight-hour days with a lunch break in the middle of the day. For example, they may go to work at 9:00 a.m. and leave at 6:00 p.m., taking an hour for lunch sometime in the afternoon. However, it is important to keep in mind that some variations do occur. Some credit analysts may work longer hours each day, especially if they work for large corporations where there may be critical financial situations that arise or when fiscal deadlines are on the horizon.
How Much Does A Credit Analyst Make Per Year?
In the United States, the average credit analyst makes $48,560 per year. On the lower end, entry-level analysts may start at around $36,000 per year. Those who have been in the industry for some time earn closer to $70,000 per year. In addition to salary, analysts may earn bonuses or commission or share in profits. Bonuses can be up to $10,000 per year, while commission can range up to nearly $12,000 annually. Profit-sharing usually tops out at a little more than $5,000 in a year. Of course, most employers also provide analysts with insurance packages, vacation packages, sick leave and other benefits.
Several factors will determine exactly how much someone gets paid. Of course, experience is the most important one. An entry-level analyst is likely to make much less than someone with experience, although most people receive raises each year and promotions every few years. Location, employer and the type of clients the analyst works with also factor into overall pay.
What Is The Job Outlook For A Credit Analyst?
The job outlook for credit analysts is not great but not necessarily bad, either. Credit analysts for individuals have been on the decline since 2004, primarily because individuals can pull their own credit reports and use a range of online tools and software to determine their own creditworthiness before applying for loans by themselves. Individuals who do still use credit analysts are often already wealthy and typically hire full financial teams. Many credit analysts are turning to working with businesses or corporations, although even when working in corporate finance, the demand for analysts is lower than it used to be. While the industry is still growing, it is doing so at a very slow rate, so entering the field is not recommended unless it is a true passion. If you do enter the area, expect to find the most jobs in California, New York and Texas.
Overall, credit analysts have a solid job that is both fun and rewarding for people who love numbers or who love helping others achieve their financial goals. The position itself provides a stable environment that allows most employees to live a rich and rewarding life with an excellent work-life balance. If you are interested in becoming a credit analyst, check out your local college for information on classes that will get you started down the path.