Credit analyst

Credit analysts investigate credit applications from customers and evaluate if the applications comply with regulations and guidelines of the financial loan-granting institution. On the basis of credit analyses they advise financial institutions whether customers are loan worthy. They perform tasks such as collecting data on the loan applicant, acquire additional information from other departments or institutions and indicating what sort of agreements the financial institution should reach with the credit applicant. Credit analysts also follow up on the development of the credit portfolio of clients.

The main duties of a credit analyst include, but are not limited to:

• gathering information about clients
• reading financial briefings
• assessing, analysing and interpreting complicated financial information
• undertaking risk analysis by developing statistical models
• visiting clients
• keeping company credit exposures within set risk bearing limits
• completing loan application forms and submitting to loan committees for approval
• using credit-scoring systems for small credit amounts (such as small unsecured personal loans)
• keeping knowledge of key issues up-to-date (for example legal, market risk and compliance issues)
• helping to enhance the quality of credit applications
• making recommendations about procedural/policy changes.

The following job titles also refer to credit analyst:

credit clerk
analyst of credits

Most credit analysts work in typical corporate office settings that are well lighted and air-conditioned in the summertime. Credit analysts can expect to work a 40-hour week, but they may have to put in overtime if a project has a tight deadline. A commercial credit analyst may have to travel to the business or corporation that is seeking a loan in order to prepare the agreement. Credit analysts can expect heavy caseloads.

A credit analyst should be able to spend long hours behind a desk quietly reading and analyzing financial reports. Attention to detail is critical. Credit analysts can expect to work in high-pressure situations, with loans of millions of dollars dependent on their analysis.

The education and training required of a credit analyst includes at minimum a bachelor’s degree in finance, accounting or a related field. A related field could include bookkeeping or business. A Master of Business Administration degree is a plus. Applicants with a Certified Public Accountant, Certified Financial Planner, Chartered Financial Analyst, Certified Management Accountant, Certified Banking and Credit Analyst or similar certification are especially encouraged to apply.

Credit analysts often require at least three years of work experience in credit analysis, credit management, credit risk, credit underwriting or other related fields. They also require working experience with statistical packages and financial software. Candidates with previous working experience in a financial or administrative position can also fit into the credit analyst positions. Other relevant work experiences areas that are valuable  include accounts payable, accounting and credit application processing. 

ISCO skill level is defined as a function of the complexity and range of tasks and duties to be performed in an occupation. It is measured on a scale from 1 to 4, with 1 the lowest level and 4 the highest, by considering:

• the nature of the work performed in an occupation in relation to the characteristic tasks and duties
• the level of formal education required for competent performance of the tasks and duties involved and
• the amount of informal on-the-job training and/or previous experience in a related occupation required for competent performance of these tasks and duties.

Credit analyst is a Skill level 3 occupation.

These occupations, although different, require a lot of knowledge and skills similar to credit analyst.

credit adviser
mortgage loan underwriter
loan officer
credit manager
mortgage broker

These occupations require some skills and knowledge of credit analyst. They also require other skills and knowledge, but at a higher ISCO skill level, meaning these occupations are accessible from a position of credit analyst with a significant experience and/or extensive training.

investment manager
venture capitalist
investment analyst
bankruptcy trustee
corporate investment banker

This knowledge should be acquired through learning to fulfill the role of credit analyst.

• Financial engineering: The finance theory field that addresses the combination of applied mathematics, computer science, and financial theory aimed at calculating and forecasting different financial variables ranging from the creditworthiness of a debtor up to the performance of securities in the stock market.
• Financial statements: The set of financial records disclosing the financial position of a company at the end of a set period or of the accounting year. The financial statements consisting of five parts which are the statement of financial position, the statement of comprehensive income, the statement of changes in equity (SOCE), the statement of cash flows and notes.
• Debt classification: The different classifications of debt such as public and publicly guaranteed debt, private non-guaranteed credits, central bank deposits, etc.
• Insolvency law: The legal rules regulating the incapacity to pay debts when they fall due.

These skills are necessary for the role of credit analyst.

• Apply credit risk policy: Implement company policies and procedures in the credit risk management process. Permanently keep company’s credit risk at a manageable level and take measures to avoid credit failure.
• Advise on risk management: Provide advice on risk management policies and prevention strategies and their implementation, being aware of different kinds of risks to a specific organisation.
• Advise on credit rating: Share your expertise in the evaluation process which assesses the debtor’s ability, be it a government institution or a business, to pay back its debt.
• Analyse loans: Examine and analyse the loans provided to organisations and individuals through different forms of credit such as overdraft protection, export packing credit, term loan, and purchase of commercial bills.
• Maintain client debt records: preserve a list with the debt records of clients and update it regularly
• Synthesise financial information: Collect, revise and put together financial information coming from different sources or departments in order to create a document with unified financial accounts or plans.
• Interpret financial statements: Read, understand, and interpret the key lines and indicators in financial statements. Extract the most important information from financial statements depending on the needs and integrate this information in the development of the department’s plans.
• Obtain financial information: Gather information on securities, market conditions, governmental regulations and the financial situation, goals and needs of clients or companies.
• Maintain credit history of clients: Create and maintain the credit history of clients with relevant transactions, supporting documents, and details of their financial activities. Keep these documents updated in case of analysis and disclosure.
• Perform debt investigation: Use research techniques and tracing strategies to identify overdue payment arrangements and address them
• Analyse the credit history of potential customers: Analyse the payment capacity and credit history of potential customers or business partners.
• Analyse financial risk: Identify and analyse risks that could impact an organisation or individual financially, such as credit and market risks, and propose solutions to cover against those risks.

This knowledge is sometimes, but not always, required for the role of credit analyst. However, mastering this knowledge allows you to have more opportunities for career development.

• Interview techniques: The techniques for getting information out of people by asking the right questions in the right way and to make them feel comfortable.
• Banking activities: The broad and continuously growing banking activities and financial products managed by banks ranging from personal banking, corporate banking, investment banking, private banking, up to insurance, foreign exchange trading, commodity trading, trading in equities, futures and options trading.
• Financial forecasting: The tool used in performing fiscal financial management to identify revenue trends and estimated financial conditions.
• Stock market: The market in which shares of publicly held companies are issued and traded.
• Investment analysis: The methods and tools for analysis of an investment compared to its potential return. Identification and calculation of profitability ratio and financial indicators in relation to associated risks to guide decision on investment.
• Tax legislation: Tax legislation applicable to a specific area of specialisation, such as import tax, government tax, etc.
• Accounting: The documentation and processing of data regarding financial activities.
• Public offering: The elements comprised in public offerings of companies in the stock market such as determining the initial public offering (IPO), the type of security, and the timing to launch it in the market.

These skills and competences are sometimes, but not always, required for the role of credit analyst. However, mastering these skills and competences allows you to have more opportunities for career development.

• Manage securities: Administer the securities owned by the company or organisation, namely debt securities, equity securities and derivatives aiming to get the highest benefit from them.
• Analyse market financial trends: Monitor and forecast the tendencies of a financial market to move in a particular direction over time.
• Interview bank loanees: Perform interviews with candidates requesting a bank loan for different purposes. Pose questions in order to test the goodwill and the financial means of candidates for paying back the loan.
• Develop investment portfolio: Create an investment portfolio for a customer that includes an insurance policy or multiple policies to cover specific risks, such as financial risks, assistance, reinsurance, industrial risks or natural and technical disasters.
• Review investment portfolios: Meet with clients to review or update an investment portfolio and provide financial advice on investments.
• Examine credit ratings: Investigate and look for information on the creditworthiness of companies and corporations, provided by credit rating agencies in order to determine the likelihood of default by the debtor.
• Budget for financial needs: Observe the status and availability of funds for the smooth running of projects or operations in order to foresee and estimate the quantity of future financial resources.

3312 – Credit and loans officers

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References

1. Credit analyst – ESCO
2. Credit analysts – Firsthand.co
3. Credit analyst: job description – Target Jobs
4. Credit Analyst Job Description – Indeed.com
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