Credit Analyst Job Description - Responsibilities, Skills and Career

A Credit Analyst is responsible for assessing the creditworthiness of businesses and individuals that apply for loans and for taking decisions on those applications.

Credit analysts evaluate the solvency of individuals and companies requesting loans using a series of qualitative and quantitative criteria, including credit risk (i.e. the risk that the lending bank or credit institution may not be able to recover the sums lent). Based on this analysis, they establish the ability of the loan applicant to fulfil their financial obligations and thus determine whether a loan can be offered or not. Where the answer is affirmative, the credit analyst is also responsible for establishing the terms of the loan, including the interest rate.

Credit analysts work for commercial banks, credit institutions, auditing firms, investment banks, private equity companies, ratings agencies, financial institutions, insurance companies, car manufacturers and dealers and other companies offering financing services.

In order to determine how, when, and to whom to extend credit, credit analysts gather information on a loan applicant’s financial status, examine their credit history and, in the case of a company, analyze their financial statements and accounts in detail. When evaluating a loan application made by a business, credit analysts look at annual reports, cash flow statements and other market data to establish the degree of risk involved in extending credit and to assign a credit rating. In performing analyses of new loan or refinance applications and evaluating collateral, analysts make use of a range of financial analysis tools and data, including financial statements, cash flows, budgets and KPI reports, and carry out projections using modelling and forecasting techniques.

Based on the results obtained, credit analysts then decide the most suitable type of loan to offer, as well as the amount and the repayment terms, in accordance with the lending company’s credit policy, and prepare a full or partial credit approval (or rejection) document, requesting additional collateral where necessary.

Before a loan can be agreed to, a credit analyst is therefore responsible for establishing the credit rating and solvency of applicants and determining if there is a sufficient margin of safety.

With regard to loans and overdrafts that are already in place, credit analysts are responsible for monitoring any deterioration in client creditworthiness and detecting any insolvency risk, and identifying any loans that are considered no longer recoverable.

Credit analysts support the commercial and retail lending operations of the bank or credit institution they work for. This means they are required to liaise constantly with colleagues providing consultancy services to businesses and private clients. Credit analysts manage loan and overdraft applications and formulate credit proposals based on the results of credit analyses. The reports and recommendations prepared by credit analysts are subject to the approval of the credit manager, who makes the final decision on loan approval.

The job of a credit analyst involves a high degree of responsibility, since the loans granted to clients may be for very significant amounts, while the risk of a bank not being able to recover the sums lent may also be high. One of the duties of a credit analyst is in fact ensuring that a lending institution’s credit exposure remains within the established risk limits.

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A credit analyst’s responsibilities typically include:

• Gathering information on clients and carrying out credit checks
• Reading/analyzing annual reports and briefings and carrying out reclassifications of financial statement items
• Measuring credit risk using statistical models (credit risk analysis)
• Evaluating creditworthiness and collateral
• Gathering supporting evidence relating to loan applications and transmitting paperwork to superiors for final approval
• Monitoring the creditworthiness of existing borrowers
• Performing analyses of loan repayment plans
• Preparing and updating reports on the financial status of debtors

When analyzing and assessing loan applications, credit analysts must ensure compliance with the lending institution’s risk and credit policies, in accordance with the applicable procedures.

A credit analyst usually requires a degree in economics, finance or other related field. This is because a knowledge of subjects such as economics, mathematics, statistics, finance, accounting and banking regulations form an essential part of the job. Other important requirements include the IT skills needed to use the mathematical and statistical programs employed to measure risk and generate financial reports.

Generally speaking, credit analysts need to be excellent decision-makers, have strong analytical skills and a head for figures. In addition, they need to possess good time management skills and perform effectively under pressure in order to meet deadlines.

Extensive knowledge of the financial sector gained through previous experience in a credit analysis role at a bank, financial institution, leasing company or business consultancy firm will provide a credit analyst with the skills needed to produce reliable credit analyses and make accurate short, medium and long-term economic and financial forecasts.

A credit analyst needs to have the following skills:

• Ability to analyse financial data and interpret financial statements
• Knowledge of credit assessment processes and tools
• Ability to use key software
• Analytical approach
• Organizational skills
• Precision and accuracy
• Problem-solving skills
• Ability to work as part of a team

So, what's the career objective of a Credit Analyst?

The career of a credit analyst may follow a variety of different paths. One possibility may involve specializing in credit management or in another highly specialist area, such as project financing.

Alternatively, a credit analyst may choose to focus on using his or her managerial abilities as the credit manager in the loans and overdrafts department of a bank or financial institution.

A further option is to acquire the business and consulting skills needed to work as a credit advisor, providing advice to both private and business clients on obtaining the type of loan that best suits their financing requirements. Finally, a credit analyst may decide to go into the debt recovery business and work for a debt collection company.

Working as a credit analyst involves dealing on a daily basis with the financial data and requirements of both companies and private individuals. These are complex matters, whose analysis and appraisal calls for a significant level of technical ability, precision and sense of responsibility - especially considering the large sums of money involved and the attendant risk.

Credit analysts have a wide range of different career opportunities to choose from, including working for banks, financial institutions and consulting firms, in a sector (i.e. finance) whose salaries are among the most competitive the jobs market has to offer - even for entry level and junior positions.

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