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There is a wealth of opportunity available if you’re hoping to succeed in a career in the financial sector. Where you end up depends entirely on you along with your goals, education, experience, and drive.
You may want to consider a role in banking or insurance. Or you may want to dive into the investment world, working as a broker-dealer or portfolio manager. There are also other roles, including accountants and advisors. And this isn’t an exhaustive list, because the possibilities are endless.
But one role that often gets overlooked is that of the credit risk analyst. In this article, we look at this role, what it takes to become one, and how much these professionals command. Keep in mind, though, that although there are many types of analysts in this field, the information in this article is meant to serve as a basic guide to the role.
Key Takeaways
- A credit risk analyst determines how creditworthy someone is based on their credit history.
- The research that a credit risk analyst conducts ultimately leads to the decision of whether a lender should issue a loan to an applicant.
- Credit risk analysts may also review and rate investments.
- Working as a credit risk analyst often requires an undergraduate degree.
- Individuals often find work in financial institutions, insurance companies, or investment firms.
What Does a Credit Risk Analyst Do?
The world learned about credit risk analysts during the events that led to the Great Recession. That’s because these individuals were responsible for assigning ratings for mortgage-backed securities (MBSs), which were the investments that led to the global financial crisis. But just what does this position entail?
In the most basic sense, a credit analyst reviews and assesses someone’s financial history (an individual or a company) to determine if they are creditworthy. In other words, credit risk analysts determine the risk of default to lenders when they consider issuing loans to their clients. This means that whatever these individuals do has implications for anyone who wants to buy a house, get a loan, or invest.
This kind of analyst does not just provide a recommendation or approve or deny an application, they also often lead to a “yes, but …” answer. Someone seeking a loan may qualify but with specific conditions, such as a higher or lower interest rate. This often depends on the applicant’s repayment history and credit score.
Other analysts may add a specified level of collateral or certain contingencies to their qualification, such as requiring that the client’s bank account balances 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 commensurate compensation.
Credit Risk Analyst Education and Training
The responsibilities of a credit risk analyst include the:
- Evaluation of financial data, such as balance sheets and income statements to determine the level of default risk
- 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.
The initial work experience for many analysts tends to be in areas like accounting, accounts receivables/payables, or loan application processing.
Credit risk analysts can also obtain special certifications and designations along with their education. These include the Credit Risk Certification (CRC) from the Risk Management Association, the Certificate in Commercial Credit, or the Commercial Banking & Credit Analyst certification. Getting a special designation may lead to better opportunities, including a higher salary.
Credit Risk Analyst Jobs and Salary
Credit risk analysts can work in a variety of fields and locales. Many work for lending institutions like banks or insurance companies. There is also a great demand in the investment industry, working for an asset manager or private equity firm as a bond analyst or for rating agencies like Moody’s or Standard & Poor’s, determining the riskiness of investing in a company or country.
The salary range for credit risk analysts reflects the plethora of opportunities. According to the Bureau of Labor Statistics, (BLS) the annual salary for credit risk analysts is broad and ranges between $50,060 and $164,750 and is dependent upon the level of experience, type of industry, and geographic location.
The following table from CareerExplorer.com details the various salaries of credit analysts in New York based on experience levels.
| Senior The top 25% of Credit Analysts in the United States earn: |
$162,780 |
| Experienced The middle 50% of Credit Analysts in the United States earn: |
$121,700 |
| Junior The bottom 25% of Credit Analysts in the United States earn: |
$79,330 |
| Starting The bottom 10% of Credit Analysts in the United States earn: |
$63,020 |
Special Considerations
As noted above, most of the information in this article relates to the general role of a credit risk analyst. However, different types of analysts may deal with a certain specialty in their careers.
For instance, some analysts may deal specifically with small businesses, reviewing and approving applications for small business owners. Another type of analyst is the investment firm credit risk analyst. This role may require additional education and experience than other analysts.
What Skills Are Most Important for a Credit Risk Analyst?
A credit risk analyst needs strong analytical and critical thinking skills, as they frequently interpret complex financial data to assess risk. In addition to technical skills, they benefit from strong communication abilities to clearly present findings and recommendations to non-technical stakeholders, such as loan officers or investors. Additionally, attention to detail and understanding regulatory requirements are crucial, as credit analysts must navigate compliance issues while evaluating creditworthiness.
What Other Career Paths Can Credit Risk Analysts Pursue?
Credit risk analysts have a broad set of skills that can be applied in several sectors beyond traditional banking. They may find roles in asset management, where they assess the creditworthiness of bonds or other investment products, or in fintech, where their skills can help develop credit algorithms for lending platforms. Some analysts transition into risk consulting for corporate clients or work with regulatory agencies, contributing to policy and compliance frameworks around credit and risk management.
How Do Economic Changes Affect the Role of a Credit Risk Analyst?
Credit risk analysts often adapt their criteria and risk thresholds during economic downturns or financial instability. For example, when interest rates rise or default risks increase, analysts may tighten lending criteria, adjust their forecasting models, and emphasize stress testing to account for changing market conditions. In volatile times, these professionals may also work closely with other departments to reassess risk management strategies and ensure that the institution’s lending practices remain sustainable.
The Bottom Line
Credit risk analysts typically work in a pressured environment where their research leads to a decision to grant a loan or to make an investment. It takes a certain confidence to have conviction in the analysis and make a sound decision, and analysts are duly compensated.