What Is A Credit Analyst?
"I am interested in doing a finance job, but I haven’t decided yet which job I want. Credit analyst seems like something that would be good with our economic climate. Don’t credit analysts help banks to make smart lending decisions? Isn’t that extra tricky nowadays what with the recession and all? I’d think this would be a hugely growing field. Can you tell me more about the job duties and goals?"
asked by Helen from Potomac, VA
Credit analyst is a fast growing field which a great deal of need in certain geographic regions where credit-related products are on the rise. And as you mentioned, with a lot of companies and individuals struggling, credit analysis computations can be extra complex these days. As a credit analyst, your job would be to make sure that you have properly matched up banks and lenders so that lending institutions are making smart, low-risk financial investments in customers. You do this by determining the creditworthiness of the individual or business that is applying for credit.
Based on both the lender and the borrower, you assign a risk rating to the situation. This risk rating is a way of quantifying the likelihood of default over the course of the life of the loan. Based on that, you can come up with a numerical estimate of the loss the lender may incur if the borrower defaults.
How do you come up with the risk assessment? You need to gather information about the financial habits and history of the potential borrower. You then analyze that information in order to generate the risk rating.
At that point, you generate a specific recommendation for a course of action. That course of action might be to extend a loan or to deny one. Or you might recommend a middle course of action, such as a secured loan.
A credit analyst who can properly come up with these risk ratings and recommendations helps financial institutions to protect themselves from customers who are unlikely to pay back their loans. You also are helping customers who are credit-worthy to secure loans by properly analyzing their financial situations and coming up with an accurate risk rating.
In order to become a credit analyst, you will need a bachelor’s degree. Since there is no such thing as a degree in credit analysis, you will need to get a bachelor’s degree in another closely related field, such as finance. A degree in accounting, statistics, or business may also suffice. Make sure though that you are getting all the mathematical and financial training that you need, regardless of the type of degree you get.
You should also consider getting yourself into an internship so that you can build up experience and become a more competitive job candidate.
An MBA is not required, but it can help you to stand out from the competition, so you may also want to consider going on to a higher degree once you complete your bachelor’s degree.