A credit analyst
is a person employed by an organization to analyze the
credit worthiness of customers and potential customers,
and to assist in the ongoing
management
Management (or managing) is the administration of an organization, whether it is a business, a nonprofit organization, or a government body. It is the art and science of managing resources of the business.
Management includes the activities o ...
and
modeling
A model is an informative representation of an object, person or system. The term originally denoted the plans of a building in late 16th-century English, and derived via French and Italian ultimately from Latin ''modulus'', a measure.
Models c ...
of
credit risk
A credit risk is risk of default on a debt that may arise from a borrower failing to make required payments. In the first resort, the risk is that of the lender and includes lost principal and interest, disruption to cash flows, and increased ...
thereafter.
See and for discussion.
In May 2015, the
U.S. Bureau of Labor Statistics reported 70,840 people employed as credit analysts. The salary for this position ranged from $40,250 to $134,080 with a mean average wage of $79,720.
In
investment bank
Investment is the dedication of money to purchase of an asset to attain an increase in value over a period of time. Investment requires a sacrifice of some present asset, such as time, money, or effort.
In finance, the purpose of investing is ...
s,
"quants" are responsible for the analytics related to
the risk management and
regulatory capital
A capital requirement (also known as regulatory capital, capital adequacy or capital base) is the amount of capital a bank or other financial institution has to have as required by its financial regulator. This is usually expressed as a capital ...
due to credit risk on the
banking book
The Fundamental Review of the Trading Book (FRTB), is a set of proposals by the Basel Committee on Banking Supervision for a new market risk-related capital requirement for banks.
Background
The reform, which is part of Basel III, is one of th ...
(and to
pricing and
hedging credit derivatives
In finance, a credit derivative refers to any one of "various instruments and techniques designed to separate and then transfer the ''credit risk''"The Economist ''Passing on the risks'' 2 November 1996 or the risk of an event of default of a cor ...
). This position is distinct from the more commercially-focused
credit management
Credit management is the process of granting credit, setting the terms on which it is granted, recovering this credit when it is due, and ensuring compliance with company credit policy, among other credit related functions. The goal within a bank ...
role described in this article.
Job responsibilities
Job responsibilities include the following:
* Reviewing credit applications
* Projecting sales
* Evaluating credit risk
* Analyzing financial data, statements and trends
* Setting new customer credit limits
* Recommending credit limits based on company credit policies
* Performing credit reviews of existing customers
* Maintaining customer files with financial statements and bank reference information
* Resolving credit issues
* Monitoring risk trends on behalf of management and sales personnel
Education
Credit analysts typically
[C. Morah (2021]
Analyzing a Career in Credit Analysis
investopedia
Investopedia is a financial media website headquartered in New York City. Founded in 1999, Investopedia provides investment dictionaries, advice, reviews, ratings, and comparisons of financial products such as securities accounts. Investopedia ha ...
.com
hold a
business related bachelor's degree majoring
in finance,
in accounting,
in business administration, or
in economics.
Depending on the role, some companies may require a
professional certification such as the ''Credit Business Associate'' from the
National Association of Credit Management
The National Association of Credit Management (NACM) is a non-profit organization based in Columbia, Maryland that promotes standards for the business-to-business credit profession. Founded in 1896, NACM has more than 15,000 members, primarily of ...
(NACM).
Particularly for analysis involving
the technical elements of
EAD,
PD and
LGD modelling, some
quantitative training, specifically in statistics and calculus, will be required.
[Staff (2019)]
Credit Risk Measurement and Management
/ref>
Often, a math or actuarial degree, and / or the FRM or PRM certification may be recommended. See also .
Professional Organizations
Credit analysts in the United States can obtain memberships, continuing education and certification through NACM. Certification levels include Credit Business Associate, Certified Credit and Risk Analyst, Credit Business Fellow, Certified Credit Executive, Certified International Credit Professional and International Certified Credit Executive.
See also
* Credit assistant A credit assistant is a person employed by an organization to provide support services to credit managers, credit analysts and other members of the credit department. This position is often entry level. Job responsibilities may include:
* Collectio ...
* Credit manager
Credit management is the process of granting credit, setting the terms on which it is granted, recovering this credit when it is due, and ensuring compliance with company credit policy, among other credit related functions. The goal within a bank ...
* Director of credit and collections A director of credit and collections is a senior-level employee in an organization's credit department. Job responsibilities may include:
* Overseeing credit and collection functions
* Hiring, firing, evaluating and promoting credit department emplo ...
* Financial analyst
A financial analyst is a professional, undertaking financial analysis for external or internal clients as a core feature of the job.
The role may specifically be titled securities analyst, research analyst, equity analyst, investment analyst, ...
References
{{Reflist
Credit management
Finance occupations
Financial analysts