What does a credit analyst do?

What is a Credit Analyst?

Did you know that a credit analyst plays a very important role in the health of our economy?

Credit makes the entire modern economy function from day to day. Without the objective recommendations of credit analysts, banks and insurers would not be able to extend lines of credit to businesses or individuals seeking loans for homes, cars, and occasionally employee payrolls as well.

What does a Credit Analyst do?

Assessing many different risk factors includes gathering a large amount of financial information. Credit analysts compile these financial records and make knowledgable recommendations on whether or not to extend credit.

Objective financial analysis is the mark of a successful credit analyst, particularly those employed at large global financial institutions. The ability to analyze mathematical information objectively is the most important quality a credit analyst can possess.

Financial analysis is an inexact science. The day-to-day and even hour-to-hour fluctuations in financial markets can change the outcome of even the most thorough analysis. High-level organizational skills allow credit analysts to cope with these swings in the market.

Given the instability in the global economy, opportunities for employment as a credit analyst are in very high demand as companies large and small look for ways to remain profitable. Providing companies and investors with the financial analysis necessary to make wise business choices gives credit analysts a lot of opportunity to earn excellent performance-based bonuses as a result.

The job duties of credit analysts depend upon the size of the work environment. Employees of a large financial institution may only focus on one single aspect of financial analysis. For example, entry-level credit analysts may only gather information on stock movements. Another analyst employed in the same firm may only gather information on sovereign bonds or credit-backed derivatives.

Credit analysts can use their knowledge for either businesses or individual investors. When making portfolio recommendations to individual investors, credit analysts take past financial statements and credit history, and combine this information with the current health of an individual's lines of credit.

Often, this careful analysis saves individuals from pursuing bad investments that otherwise would have forced an investor into bankruptcy.

On the business level, credit analysts perform a similar analysis while taking into account many more factors. For example, business tax rates are very different from the tax rates put on an individual's income and investments. Credit analysts may collect information on a company's sales, operational costs and even employee efficiency standards which relate directly to the financial health of a business.

The presentation of a credit analyst's recommendations can either take place in person or in writing. The most successful credit analysts give prepared lectures in an office environment, but this type of presentation is not necessary when dealing with individual investors. In the case of individual investors, a thoroughly written statement is enough most of the time.

What is the workplace of a Credit Analyst like?

Credit analysts work an average 40-hour work schedule, but managers work far more hours, arriving very early in the morning and leaving late in the evening.

Credit analysts often work in banks and have face-to-face interviews with investors, but an increasing number of credit analysts actually work online, conducting conferences with potential clients hundreds of miles away. Technology has provided careers in financial analysis the ability to conduct business almost anywhere.