How To Become a Credit Analyst

If you have ever — or ever plan to — apply for a loan, buy a house or start a business, your life will be affected by the work of credit analysts, also known as “credit risk analysts.” Credit analysts play an integral role in the assessment of financial risk, which affects virtually every person and business at some point. If you’re fascinated by the world of finance, you might consider exploring the pathway for how to become a credit analyst.

What Is a Credit Analyst?

Loans and lines of credit play a fundamental role in the economy. They can fuel economic growth by enabling entrepreneurs to open or expand businesses. They also allow consumers to make large purchases, such as homes, vehicles and medical treatments. However, banks, credit unions, investment firms and other financial institutions cannot issue a loan or line of credit to every person or business that knocks on their door looking for a financial boost.

Certain applicants can present a significant risk of default (or failure to pay off the loan). This is where credit risk analysts enter the picture. It’s the job of the credit analyst to assess the risk of issuing a loan. In other words, they can anticipate the likelihood of the applicant defaulting on the loan.

Essentially, a credit analyst serves as a gatekeeper to the vault, determining who is granted access to funds. However, credit analysts are not typically responsible for making the final decision. After performing a risk assessment, the credit analyst will compile a report on their findings and recommendations, which they pass along to a manager who will make the final decision on whether to issue a loan or line of credit.

To perform their risk management job, credit analysts will usually do the following tasks:

• Compile and review financial information from the applicant, such as financial statements and — if the applicant is a business — sales data
• Compile and review financial information from comparable businesses in that particular industry
• Process and analyze the financial data, such as by performing simulations and projections
• Determine all possible risks that could lead to default, which, for a business applicant, could include tariffs, recent reputational damage, reduced demand and competitors that are driving prices down
• Develop a report and recommendations on whether to issue a loan or line of credit to the applicant
• Monitor all fund recipients to proactively determine whether a default could be imminent

Becoming a Credit Analyst

If the typical job description of a credit risk analyst appeals to you and you’re still in high school, it’s time to make an appointment with your guidance counselor. Ask whether you can add any additional courses that will help you prepare for your future career. Any courses in finance, accounting, economics, business and mathematics will be valuable.

After high school, you should plan on earning a bachelor’s degree in a related field, such as finance or accounting. It’s not necessary to earn a graduate degree to pursue a job in this field. However, you might choose to return to school later to earn a master’s degree if your employer prefers to promote those with this advanced credential.

It’s common for newly hired credit analysts to undergo a period of on-the-job training. Gaining experience and a favorable professional reputation can lead to advancement opportunities, as can earning a voluntary certification in the field.

Earn Your Finance Degree

After high school, the first step in the process of how to become a credit analyst is to earn your bachelor’s degree. Although there is some flexibility regarding the type of degree you can earn, it should be in the field of finance, accounting or economics. A finance degree can be particularly advantageous because this broad degree will cover important topics such as risk management, macroeconomics, microeconomics and investments.

Although the specific curriculum will vary from one school to the next, you can generally expect to study the following as you work toward earning a finance degree:

• Practical applications of inferential and descriptive statistics in business, including hypothesis testing, correlation, regression, confidence intervals and the central limit theorem
• Managerial/business finance and the financial markets, with a look at financial statement analysis, asset valuation, risk assessment, interest rates and the cost of capital
• The fundamentals of risk management and insurance, including the identification and mitigation of personal and commercial risks
• Essentials of investments, including the securities market, trading procedures, portfolio theory in corporate investments, exchange-traded funds, stocks, bonds and mutual funds

In addition to your degrees, potential employers will be looking specifically at whether you've completed courses in statistics, economics, financial statement analysis, and risk assessment. They may also require some on-the-job experience in banking, accounting or finance.

While you’re studying for your finance degree, visit the career services department on campus and inquire about internship opportunities. You’re likely to find it advantageous to begin building your professional network and gaining some work experience before graduation. In fact, an internship might help you land a job more quickly after graduation.

Consider Pursuing a Voluntary Certification

Earning an industry certification isn’t mandatory for aspiring credit analysts. In fact, some certification options may require you to have a certain amount of professional work experience before you’ll be eligible to pursue them. However, at some point during your career, earning a professional certification can be a good idea, because it may allow you to pursue advancement opportunities.

Some of the most reputable certification options are as follows:

• Credit Risk Certification (Risk Management Association)
• Credit and Credit Risk Analysis Professional Certificate (New York Institute of Finance)
• CFA Charterholder (CFA Institute)
• Credit Business Associate (National Association of Credit Management)
• Credit Business Fellow (National Association of Credit Management)

Opportunities for Advancement on the Credit Analyst Career Path

Along the credit analyst career path, there can be opportunities for advancement. After graduating with a finance degree, it’s likely that you could begin your career as a junior credit analyst at a small- to mid-size bank, credit union, investment firm or other financial institution. You might start out working on consumer accounts.

After acquiring some experience and demonstrating a solid record of performance, you may be entrusted with commercial accounts. These are typically more complex and require a more in-depth knowledge of financial principles. Then, your next step could be to apply for a senior position as a credit analyst who is responsible for overseeing a team of junior analysts.

Essential Skills and Characteristics of Credit Analysts

Credit analysts must, of course, have a strong working knowledge of finance and accounting. They must be able to scrutinize financial statements and derive insights from raw data. Other important skills and characteristics include the following:

• Technical proficiencies with the use of financial software
• Written and verbal communication skills
• Attention to detail
• Organizational and multi-tasking skills

Are Credit Analysts in High Demand?

The U.S. Bureau of Labor Statistics (BLS) is tasked with analyzing employment data and trends. Although the BLS doesn’t track data specifically for credit analysts, it does so for a closely related and often overlapping profession: loan officers. Taking a look at the employment trends for loan officers could offer some insight into the demand for credit analysts.

The U.S. Bureau of Labor Statistics Occupational Outlook Handbook estimates job growth for loan officers to increase by about 3% from 2019 to 2029, accounting for an estimated increase of 10,100 jobs in the field.¹

If you aspire to work in finance in any capacity, Grand Canyon University can help you pursue your dreams. Apply for enrollment in the Bachelor of Science in Finance with an Emphasis in Financial Planning degree program. This program emphasizes competencies such as risk management, financial management, investing and professional ethics. This degree can also serve as a springboard to pursue the Certified Financial Planner (CFP^® professional) designation. GCU also offers a Master of Business Administration with an Emphasis in Finance.

¹ COVID-19 has adversely affected the global economy and data from 2020 may be atypical compared to prior years. The pandemic may impact the predicted future workforce outcomes indicated by the Bureau of Labor Statistics as well. Accordingly, data shown is based on 2019, which can be found here: U.S. Bureau of Labor Statistics, Occupational Outlook Handbook, Loan Officers.

Approved by the Program Coordinator for the Colangelo College of Business on Dec. 16, 2022.