What Does a Credit Analyst Do? Role, Duties and Daily Tasks

Credit Analysts are key players in the money-lending business. They have distinct roles and responsibilities that ensure a smooth flow of funds within a community. So what does a credit analyst do?

As financial professionals, their main job is to analyse the creditworthiness of loan applicants. Individuals, small businesses, and larger companies require credit to achieve specific financial objectives. They need banks and NBFCs to approve loan applications so that they receive funding. However, money-lending organisations need a guarantee that the loan will be repaid.

A skilled professional who can determine which loan applicant has the financial capacity to make the payments. The credit analyst will evaluate the fiscal health of the potential customer and analyse any possible risks that may inhibit the full recovery of the loan.

Without their expertise, banks could face high losses. Credit analysts protect the banks from incurring bad debts. The job requires technical skills, proficiency in financial software, and industry knowledge. Let’s get into more detail about what makes a good credit analyst.

Roles and responsibilities of a credit analyst

An analyst must carry out specific tasks to determine the borrower’s creditworthiness. How well you handle each one is what makes a good credit analyst. Here below are some of the day-to-day responsibilities:

1. Financial analysis

• Examine and analyse the borrower’s financial statements, which include cash flow statements and balance sheets.
• Use financial ratios, such as profitability, liquidity and debt-service coverage, to assess the client’s creditworthiness.

2. Evaluate credit risks

• Check for potential credit risks to avoid any losses due to default payments.
• Carry out a credit risk analysis and then allot a credit rating per the findings.

3. Market analysis

• Gauge industry trends and study economic factors that could affect repayments.
• Carry out risk assessments on the specific business sector before approving the loan.

4. Create reports

• Put together research findings and recommendations in a comprehensive credit report for managers, loan officers and shareholders.

5. Meet with clients

• Connect with potential customers to procure financial data and documentation.
• Work with them to solve issues and finalise terms.

6. Carry out due diligence

• Verify all document and finance information as authentic and accurate.
• Ensure compliance with government regulations and company policies.

Also Read – The Roadmap to Becoming a Credit Analyst with No Experience

A typical day as a credit analyst

What does a credit analyst do all day? The professional has to carry out different activities, meet deadlines and multitask to complete all responsibilities. Below are the events that occur during an average workday.

Morning:

9 am: Read emails, return client calls and prioritise today’s tasks in order of importance.

10 am: Meet with the team for an update on current cases.

11.30 am: Review new loan applications placed on your desk.

Afternoon:

12.15 pm: Begin the process of assessing a borrower’s creditworthiness. Use financial models, ratios and software tools to make calculations and projections.

1.00 pm: Break for lunch

2.00 pm: Research industry trends and economic indicators that could impact your client’s financial stability and their ability to make loan repayments. Determine their current credit score through platforms like CIBIL.

3.00 pm: Meet with existing clients to discuss their loan terms, financial plans and existing concerns.

Evening:

4.15 pm: Finish working on credit reports and recommendations due tomorrow.

5.30 pm: Quick meeting with the manager and senior analysts for feedback on existing cases.

6.00 pm: End of work day.

Career opportunities for credit analysts

Credit analysts are an asset in the finance industry. Their skills and expertise ensure they have strong prospects in money-lending businesses, fintech, investment services and risk management. What does a credit analyst do to find opportunities in finance? They use their credentials and abilities to move up the career ladder take on leadership roles and play a big part in the decision-making process. They are hired by banks, finance firms, NFBCs, insurance agencies and many other sectors. Some of the leading companies that hire analysts are:

• HDFC Bank
• ICICI Bank
• Axis Bank
• Mahindra Finance
• Edelweiss Financial Services
• CRISIL
• Barclays
• Deutsche Bank
• HSBC
• Citi Bank
• Standard Chartered

Career progression for credit analysts

Entry-level positions (0 – 2 years of experience)

As a fresher, you may lack the required experience but the right qualifications will help you land a good job. You should be well-versed in financial modelling and financial analysis. Companies also expect you to have a good understanding of financial ratios and accounting principles.

Designation: Junior Credit Analyst, Trainee Analyst

Salary expectations: Rs 3 to Rs 6 lakhs a year

Mid-level positions (3 – 7 years of experience)

Once you have gained some experience, you can take on more responsibilities. You can work independently when assessing loan applications. At this stage, you also develop new skills such as advanced credit risk modelling and client management.

Designation: Credit Analyst

Salary expectations: Rs 6 to Rs 12 lakhs a year

Senior-level positions (8 – 15 years of experience)

You are now in a leadership role and can efficiently supervise a team of analysts. You also have the authority to approve high-value loan applications and work with business development teams to manage bigger portfolios.

Designation: Credit Risk Manager, Senior Credit Analyst, Relationship Manager

Salary expectations: Rs 13 lakhs to Rs 20 lakhs a year

Leadership positions ( More than 15 years of experience)

As senior management, you can shape company policy and make strategic decisions. You play an integral role in team management and product innovation.

You also interact with shareholders and high-profile clients.

Designation: Vice President, Head of Credit Risk, Chief Credit Officer, Chief Risk Officer

Salary expectations: Over Rs 30 lakhs a year

Also Read – Is Credit Analyst a Good Job? Salary, Growth & Job Opportunities

Educational requirements for credit analysts

The right qualifications are what make a good credit analyst. A solid foundation in finance can shape you as a professional and help you nail your job interview.

You need one or more of the following qualifications to work as a credit analyst:

• Bachelor’s degree in commerce/finance/economics/accounting
• MBA in finance
• CFA
• FRM
• Financial modelling

Skills and Knowledge

• Strong analytical and critical thinking
• Expert knowledge in accounting principles, financial markets and government regulations.
• Proficient skills in accounting tools and financial modelling.
• Good written and oral communication
• Sharp decision making
• Great attention to detail
• Research skills

Also Read – The 5 Cs Of Credit Simplified! And Here’s Why They matter!

Benefits of being a credit analyst

1. Many opportunities for career growth

The finance industry has seen an increase in the demand for credit analysts.

2. Good earning potential

Analysts earn competitive salaries, bonuses and perks.

3. Great opportunity to develop expertise

Your career as a credit analyst will help you build advanced skills and abilities that will help you elevate to leadership roles.

4. It is a very stable career

The money-lending business has stood the test of time even during economic crises.

Why you need Proschool’s CFA course

Ask, how can you become a credit analyst? And at Proschool, you’ll find all the right answers. As one of India’s best CFA coaching institutions, Proschool offers an exhaustive CFA program that enables students to prepare for all three levels.

Experience CFA professionals serve as qualified professors who use active learning tools and innovative training techniques to teach students. You also receive personalised attention and skill development so that you are ready to be a top-notch CFA professional.

Proschool’s CFA Prep Course features:

• You can attend any of the 15 coaching centres in India or online classes at your convenience.
• Students receive doubt-solving sessions, customised study plans and revision classes.
• There are over 2,000 practice papers, five mock exams, learning videos and prep books to help you study for the exams.
• Proschool’s placement program helps students find good job positions in the industry.
• Mock interviews are held to help you get ready for the recruitment process.

Conclusion

The credit industry is vital for the economic growth and development of any nation. A credit analyst helps to ensure companies and individuals receive crucial funds. What does a credit analyst do to kickstart his career? A CFA certification can help you move in the right direction. The course will give you the training and knowledge to succeed in this business and become a capable credit analyst.

FAQs

What is the main responsibility of a credit analyst?

The main responsibility is to assess the creditworthiness of a potential borrower. This means you have to analyse and examine the client’s financial worth to determine if they are capable of paying back the loan. Effectively accomplishing this task is what makes a good credit analyst.

How much do credit analysts make in the course of their careers?

A credit analyst’s salary starts at Rs 3 lakhs and can rise over Rs 30 lakhs annually. The exact number depends on your experience level, company, location and expertise.

What qualifications are needed to be a credit analyst?

Some companies hire professionals with a bachelor’s degree in finance or commerce. Others prefer to recruit candidates with an MBA, CFA or FRM. Professional certifications give you an advantage over other candidates.

Do credit analysts have a good work-life balance?

Yes, compared to other finance professionals, credit analysts don’t work very late hours unless they have an important deadline. They mostly enjoy a good work-life balance.