What Does A Credit Analyst Do?
"I am interested in a career in the financial services industry. A close friend said I should consider becoming a credit analyst like him. I’m not exactly sure what he does. What does a credit analyst do?"
asked by Winston L. from Rochester, New York
In a nutshell, credit analysts are professionals responsible for evaluating the creditworthiness of borrowers. They look at the records and background of the individuals or companies applying for a loan using a variety of criteria. They often get their training from the company they work for regarding which loans are going to be approved or not. In most cases, their decision on a particular applicant is often considered final. Those they deem to be trustworthy will be given the loan while those that appear to them as potential defaulters won’t.
But approving or denying a loan comprises just one part of the job of credit analysts. They also have a say on what the terms of the loan are going to be. Those who they consider as higher credit risks based on their credit history, credit score, income and other risk factors may be given a lower loan amount and/or a higher interest rate.
Those who pose as lower credit risks for the lender based on the evaluation and judgment of credit analysts will be given better loan terms. Analysts may also influence the length of time of repayment and other terms of the loan.
To determine if a borrower is creditworthy, credit analysts will have to do a background check on the individual or organization. They may do interviews with employers to check if the borrower has declared the right income or is even employed with a company. An important part of their work is getting credit reports from the three main credit bureaus and analyzing the borrower’s credit score to check if he paid his dues promptly in the past.
Credit analysts may perform other background checks as he sees fit, using both online and offline sources. The crux of the job of mission of analysts is to safeguard the lender from borrowers who have a higher chance of defaulting while at the same time not missing out on the opportunity to grant deserving borrowers the loan they need and deriving a profit from it.
After the credit analysts have made their decision on loan applicants, they may also be the ones who will inform the latter about it. This is typically done by sending a letter to the borrowers telling them that they have been approved or denied for the loan. Those who are approved may proceed with the next steps to get the loan released while those who are denied may opt to appeal the decision or find another lender to borrow from. In the event that credit analysts are not located in the same city as the borrower, they may inform the clients of the results through the banker handling the loan application.
Credit analysts are employed with lending companies, banks, credit firms and other financial institutions. They typically work fulltime, with their days filled with client meetings and research.