What Does a Credit Analyst Do?

The role of a credit risk analyst is, first and foremost, about deciding whether a person or company is likely to repay a loan. They examine financial data while also taking into account general trends to make a decision on whether it’s financially viable to extend credit.

Simple? In principle yes, but the credit analyst career path can entail many roles and responsibilities, all of which require a solid and detailed understanding of the job and its intricacies. So today let’s take a closer look at what a credit analyst is and how you can become one.

What is a Credit Analyst?

A credit analyst’s daily work generally consists of data collection and analysis. The devil is in the details so a credit analyst’s tasks are usually about making sure they’ve got exactly the right information about the client.

It’s worth noting that they don’t just respond with a yes or a no, most of the time. With loans it’s less about whether or not a company/person can repay but how much they can repay and in what timespan. Keep in mind that a loan is, at its core, a product being sold by a bank. Banks want to give out loans but they need someone to make sure reasonable and responsible checks are being put in place.

All of which to say that credit analysts are usually measuring boundaries. They’re setting reasonable expectations and limits. Yes, sometimes that limit is a flat rejection but, contrary to popular belief, a credit analyst’s job isn’t just to mitigate any risk. Rather they have to make judgements on how much risk is reasonable.

That said, a credit analyst isn’t the one who calls the shots. Although there’s a lot of responsibility in getting the right info – and being able to overwrite the mathematical models when you spot a red flag – the real decision is still in the hands of the higher-ups.

Credit Analyst Career Paths

So what does a credit risk analyst career path look like? And how do you become one of those higher ups? And what qualifications are required?

First up, before you can even start your credit analyst career path, you’ll need a degree in finance, accounting or economics. Essentially, you’ll need to be able to demonstrate adequate evidence that you know the credit world and how it works.

After that you’ll want to find your first role, working as a credit analyst for around one or two years before moving into more senior positions.

Where can you go as a credit analyst?

Well, the major advantage to this role is that it gives you an incredibly far reaching perspective on the world of finance. Once you’ve been a credit analyst, you could move up into more senior roles or else move into the corporate banking world.

Put simply, if you’re interested in finance at all, then working as a credit analyst will be an excellent way to kick off your career.

Should You Become a Credit Analyst?

Deciding on any career path is always down to the individual. Do you enjoy getting into the nitty gritty of transactions? Are you the type to be fascinated by all things finance and always willing to learn more? Would you feel comfortable spending most of your working day in a spreadsheet?

If the answer to those three questions isn’t yes, yes, and yes, then maybe you should rethink this career choice. If it is, then this is a world you’ll be able to dig deep into.

The amazing thing about working any finance role, is that you get to interact with every kind of sector. By becoming a credit analyst, you’ll have a window into all kinds of worlds, which can be incredibly rewarding for analytical types in general. If you’re the kind of person who likes to take something apart to see how it works, then credit analysis is that but for the business world.

Of course, credit analysis certainly isn’t the only viable path into finance. Other popular roles include financial managers and investment banking, both of which can also be very rewarding in their own ways. So before making your decision, make sure to take your time and really research all the roles available to you.