The classification of duties and essential qualification and industry specifications of a credit analyst along with other details have been included in the article. To know more, read on.
Rating the credit worthiness of a said person or an organization is the primary job of a credit analyst. When any bank, financial institute or a company hands over a service or contract or even some kind of loan, credit or a loan to a person, the credit analyst does the job of determining the credit worthiness of that entity. The field of credit analysis is so vast that the duties of the analyst differ in accordance with the employers.
The companies which usually need the services of a credit analyst include, banks, credit card companies, financial institutes, investment companies and firms such as, audit or consultancy firms and the accounts and financial departments of very large companies. In some cases, rating companies, insurance companies and credit rating agencies also tend to employ highly skilled credit analysts. On the whole, the credit analyst severs a position which is quite similar to a financial analyst, however, he deals with credit related analysis, unlike a normal financial analyst who supersedes a credit analyst.
Credit Analyst Job Description
As mentioned above, the job description principally depends upon the employer and the employer’s operations. However, the analysis of credit and the creditworthiness assessment of an entity is the primary orientation of this discipline and profession. Take a look.
1. Banking and Lending Institutes
During the loan approval process, that is before the loan amount or line of credit is disbursed, there are two very important process that the lenders undertake, these include underwriting the loan and secondly, the analysis of borrowers credit. The credit analysis involves determining whether a particular borrower is creditworthy or not and is he capable of repaying the loan completely and in full. In such a situation, the credit analyst would conduct the following functions:
- Assessing the person’s credit report and rating
- Checking and verifying the borrower’s source of income and the income stability
- Other debts which the borrower owes
In certain cases, negotiating with borrowers, fixing installments and appropriate rates of interest are also included in the credit analysis. In some organizations, providing after-approval services, handling debt collection and communicating with debtors and creditors also becomes a part of the analyst’s job description. In certain cases, the analyst also takes care of underwriting of loans and credit lines, or normal credit. In such cases some common duties include:
- Assessing the collateral/security of the loan and its future projected value
- Assessing and statistically deriving the market value of the collateral and security
Thus while working in the lending sector, the credit analyst tends to ensure that the borrower and the debt is recoverable, creditable and profitable. It must be noted that in certain cases, underwriters also accompany such credit analysts.
2. Credit Card Companies
This is a type of credit analysis that is exactly like the one mentioned above. However, the primary focus of the work lies in the monthly income of the person and also in the credit report and credit ratings. Similarity, an analyst also focuses on the other debts and debt to income ratio. This kind of job involves a lot of statistical and numerical data and derivations from the same. In some credit card companies, the APR (Annual Percentage Rates) and the credit limits, debt settlement and negotiations or after-sales services are conducted by the credit analyst.
3. Sales, Accounts and Finance Departments
Throughout the world, the provision of credit is used to boost sales by enabling the customers to purchase now (at a partial price) and pay the debt later on along with interest. A credit analyst from the accounts and finance departments is needed, to assess the credit worthiness of the client who shall be using the credit. Whether a client should be granted such a credit or not is ascertained by the credit analyst. In such conditions recovering the money and preventing the bad debts also becomes the job of a credit analyst.
4. Rating and Audit Firms
Today, like the credit reports of people, the credit rating agencies can be hired to churn out reports for companies, partnerships and business organizations. These reports are calculated by credit analysts. Such analysts usually use the audited reports and financial statements to designate the ratings. Such ratings are prominently used by clients and related companies and also by investors and stock holders. In such a field, the credit analysts often asses the condition of the company on a daily basis often changing the ratings every other day, depending upon the financial condition of the company.
Conventionally, the credit analysts are accounting and finance experts with some of them also being prominent financial analysts. The range of salary that a credit analyst make is highly versatile and depends upon several factors that include, position, qualifications and work which is done by the analyst. In the United States, well-qualified accounts and analysts working as credit analysts make about $90,000 or so annually. A highly qualified and certified analyst (Chartered Financial Analyst) can make over $150,000 in a year.
The role of a credit analyst is so varied and versatile, that it is almost synonymous to financial analyst. The career opportunities for a credit analyst are varied due to the vast and diverse financial sector.