Credit Risk Analyst: Boring Title, Great Job

One finance job that the world learned about during the global financial crisis and has implications for every person wanting to buy a house, get a loan, or make an investment is credit analysis. A credit analyst reviews and assesses the financial history of a person or company to determine if they are a good candidate for a loan. In other words, credit analysts determine the risk of default to the bank or lender. Many times a credit analysis does not just provide a simple “yes or no” answer but the analysis may lead to a “yes, but….” answer. This means that someone seeking a loan may be granted the loan but with specific conditions, such as a higher or lower interest rate (depending on repayment history and credit score), with a specified level of collateral or certain contingencies, such as requiring that bank accounts do not fall below a certain level. Because there are many variables involved with these decisions, credit analysts are required to have a certain level of education and for that they receive commiserate compensation. To learn more, read: Analyzing a Career in Credit Analysis. )

Education and Training

The responsibilities of a credit analyst include evaluation of financial data, such as balance sheets and income statements to determine the level of default risk. and preparation of a report for both the client and the lender. This evaluation includes calculating certain financial ratios to help the lender make comparisons. These responsibilities necessitate that credit analysts receive at least a bachelor’s degree, ideally in finance, accounting, economics, or mathematics (notably statistics). Many credit analysts’ initial work experiences are in the areas of accounting, accounts receivables/payables, or loan application processing.

Credit analysts can work in a variety of fields and locales. Many work for lending institutions like banks or insurance companies. Additionally there is great demand in investment, working for an asset manager or private equity firm as a bond analyst or for rating agencies like Moody’s or Standard & Poors, determining the riskiness of investing in a company or country. The plethora of opportunities is reflected in the salary range that credit analysts receive. According to numerous public websites, the annual salary for credit analysts ranges between $39,000 to $119,000 and is dependent upon level of experience, type of industry, and geographic location. The following chart details the various salaries based on experience levels. The average salary tends to fall within the range of $46,000 to $61,000. These salaries increase for investment jobs and for those located in metropolitan areas like New York City.