When you use credit, you’re basically borrowing money from a company or organization and making a promise that you can pay back the funds within a particular time period. We all know that having a good credit score is essential to:
- be approved for a loan
- take out a credit card
- achieve stable overall financial health
Whenever you’re looking to borrow money, credit analysts work behind the scenes. They analyze this credit data and financial records to determine the degree of risk involved in extending credit to you. Credit analysts are also involved in assessing the credit history of businesses. They prepare detailed reports of credit data for executives to use in critical decisions. Credit analysts work in:
- banks
- investing firms
- credit card companies
- credit rating agencies
- other companies
Salary
According to the Bureau of Labor Statistics, the 66,490 credit analysts currently employed across the United States make an average yearly salary of $72,590. This translates to a mean hourly wage of $34.90. Credit analysts working in banks bring home an average salary of $71,340. Those employed by securities and commodity intermediation brokerages earn the most at $104,730 each year.
Beginning Salary
When just starting their financial career, credit analysts can expect to fall in the bottom 10 percent of the profession with a yearly salary around $38,960. However, it’s important to remember that credit analysts with years of finance experience often break the six-figure annual salary mark by making over $119,100.
Key Responsibilities
Credit analysts are responsible for gathering important financial data about individuals or companies, including their:
- income earnings
- savings
- purchase activities
- credit history
- other paying habits
Then, credit analysts will evaluate this information and determine whether the client is worthy of a new credit. When approving loans, credit analysts also will appraise certain financial risk factors. They then give recommendations about appropriate interest rates and repayment terms. Typically, credit analysts will:
- pore over research about clients
- pull reports from credit reporting bureaus
- analyze credit scores
- verify income with employers
Once a decision is made, credit analysts also will communicate the results with clients and handle any appeals.
Necessary Skills
T
o be successful, credit analysts must have a great attention to detail for ensuring every piece of the financial puzzle is uncovered to make a wise credit analysis decision. As one might expect, mathematical skills are a must. Credit analysts must sift through numbers and know what financial data means for each client. Working on credit analysis for several clients at once is common. Possessing good organizational and multitasking skills is helpful. Credit analysts should have good verbal and written communication abilities to clearly announce their decisions to a variety of invested people. Credit analysts must also have computer skills for effectively using Microsoft Excel and other financial software in their analysis.
Degree and Education Requirements
Before you can become a credit analyst, you’ll likely need to first earn at least a four-year bachelor’s degree from an accredited business school to build your financial knowledge. Most aspiring credit analysts decide to major in:
- finance
- accounting
- economics
- statistics
- business administration
- mathematics
- or a related field
Regardless of your major, make sure you make time for electives related to:
- credit analysis
- financial analysis
- calculus
- industry assessment
- financial statement analysis
- ratio analysis
- risk management
Although it’s not required, some credit analysts seeking senior-level leadership roles may also benefit from earning a Master of Finance or MBA in Finance degree.
Pros and Cons of the Position
Starting a career as a credit analyst is a potentially rewarding decision for anyone with a mind for numbers and superb quantitative analysis abilities. One of the biggest advantages is that credit analysts have the freedom to work for virtually any company offering financing plans for products or services. Credit analysts also bring home a solid salary with good benefits and the opportunity for advancement. Some credit analysts go on to other exciting financial paths, such as:
- loan manager
- investment banker
- portfolio manager
On the flip side, working as a credit analyst has its disadvantages. Credit analysts spend most of their time sedentary at a computer, which can lead to back strain and wrist pain. Many credit analysts work longer than the traditional 40-hour work week. At times, credit analysts also have to deal with angry clients who’ve been rejected for credit.
Getting Started
While earning an appropriate education, you should seek internship opportunities related to credit analysis to start building your resume. Look for internships at:
- banks
- commercial lending firms
- investment banks
- government agencies
These will let you put your skills to the test in developing financial profiles on businesses. From there, you can start applying for credit analysis job openings. Be sure that you prepare a specific cover letter and resume customized for each credit analysis job. Once you start building entry-level work experience, you may also want to head back to graduate school or apply for professional certifications to advance more quickly. Through the National Association of Credit Management (NACM), you can become a Certified Credit and Risk Analyst (CCRA) after earning a bachelor’s degree and passing a designation examination.
Future Outlook
Thanks to the growing range of financial products on the market, there’s expected to be an increased demand for credit analysts to assess the credit worthiness of borrowers. Stricter federal regulations placed on the financial industry could also create more demand for credit analysts to carefully ensure compliance with lending regulations. In fact, the Bureau of Labor Statistics predicts that the employment of credit analysts and other financial analysts will grow much faster than average at 16 percent over the coming years. Despite this job growth, it’s still likely that new credit analysts will face strong competition for starting this entry-level financial role.
Overall, credit analysts have the important task of determining whether individuals or companies should receive a new loan or source of credit. Credit analysts specialize in evaluating credit histories and financial statements. These help predict whether the client has the stability needed to repay their loans without defaulting. If a job working with finances appeals to you, you may want to consider becoming a credit analyst and playing a crucial role in helping lending organizations reduce risk.
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