Become a Credit Analyst

A credit analyst gathers and analyzes financial data about clients. This data can include a client’s pay history, earnings, savings, and purchasing activity. The analyst, once the data is gathered, evaluates the information and recommends what to do next to their customer. Analysts work for banks, private businesses, individual clients, and customers seeking new credit. Educational requirements can vary depending on the hiring client, but usually at least a bachelor’s degree in finance, accounting, or similar field is required.

Steps

Getting the Right Education

1. Seek a bachelor’s degree in the right field(s). Businesses that hire credit analysts prefer you hold a degree specializing in one or more of several fields including: accounting; finance; ratio analysis; statistics; economics; calculus; financial statement analysis; and risk assessment. Combinations of these subjects are necessary to evaluate a client’s business environment. Look for accredited programs in your region that offer degrees in these areas.
2. Look for schools with work-study opportunities. Credit analysis is a job that depends heavily on experience as well as financial training. Ask the school(s) you are interested in if they offer either work-study or partner with area businesses for internships to get you practical experience. This can also work towards job placement later on.
3. Take financial courses. Make sure your degree includes plenty of classes that cover the right materials. You’ll want to take classes such as managerial accounting, managerial economics, fiscal policy, monetary policy, financial management, money markets, capital markets, capital budgeting, financing investment analysis, portfolio management, option analysis, financial derivatives, econometrics, and finance quantitative analysis.
4. Work while in school. Get a financial job whether or not the school provides you a financial job opportunity. Look for openings in local banks, investment firms, or see if your school has an employment assistance office. Seek positions in accounts receivable, accounting, credit application processing, or similar. These jobs can build your experience with financial data, and add to your resume for job applications later.

Gaining the Right Certifications

1. Get your credit analyst certification. This is not a requirement, but is sometimes preferred by employers even after an analyst has a bachelor’s degree and work experience. You can find training courses and the actual test through the National Association of Credit Analysts (NACA). You must complete 12, 24, or 36 hours of online classes covering the basics of credit analysis, pass a background check, maintain ethics, and be a member of NACA in good standing.
   • The reason for the difference in hours depends on increasing experience of the analyst and higher level (three levels available) of certification desired.
   • NACA also has credit analyst job listings.
2. Become a chartered financial analyst. Becoming a chartered financial analyst (CFA) is a highly sought after mark of integrity and competency for financial analysts. CFA designations require passing a three-tiered test that covers accounting, economics, ethics, money management, and security analysis among other subjects. You must already hold a bachelor’s degree, and have four years of experience in a financial career. You then apply through the CFA Institute. CFA Institute lets you work while undergoing the program before taking the exams.
   • The program can take four years to complete with six months of preparation typically needed for each exam.
   • CFA will sometimes allow you to meet the four year degree entrance requirement if you combine experience and education. This requires that the financial work was a full-time position.
3. Become a credit business associate. Getting the credit business associate (CBA) designation is achieved by completing course work through or approved by the National Association of Credit Management (NACM). Being a CBA can help get a job in the credit management industry.
4. Take courses to become a CBA. These courses focus on basic financial accounting, credit principles, and financial statement analysis. Transcripts showing successful completion (C grade or better) are submitted to NACM along with taking a three-hour exam (125-150 questions), application (includes educational background), résumé, and career plans to get the CBA designation.
   • NACM’s exam questions are usually true/false and multiple choice. Sometimes the exam also requires the applicant to prepare a mock balance sheet or other financial document. Applicants must get 70 percent correct to pass. The test is given three times a year: May, July, and November. Study guides and practice tests are available through NACM’s website.
   • Some of the current fees include $225 for NACM members and $325 for nonmembers towards the application—which includes the exam. Retaking the exam costs $55. There is a fee of $175 for members or $275 for nonmembers to create a NACM personal file within its National Education Department.
   • There is no work experience requirement to become a CBA.
5. Acquire the credit business fellow designation. The credit business fellow (CBF) designation builds on the CBA certification from NACM, but adds a knowledge of business/credit law to your professional repertoire. Application fees for CBF are $275 for NACM members and $425 for non-members. CBF exam retakes cost $80. The certified credit executive (CCE) designation builds upon the CBA and CBF designations from NACM even further, but represents considerable more experience and breadth of knowledge—10-15 years of professional financial work.
   • Note that there is no practice test for CCE. Application fees are $375 for NACM members and $525 for non-members with mandatory recertification every three years (until age 60, or age 55 and retirement) costing $150.

Working the Job

1. Attempt tasks that help individual clients. Credit analysts do many jobs on a daily basis for their clients. You will be using the skills you have once hired to evaluate credit data, process financial statements, determine loan risk, and fill out the loan documents. For other clients you may analyze reports to recommend payment plans, and exchange credit information between clients and agencies.
   • For example, you may get a job at a bank that has you regularly approving (or denying) loans for local residents. You may then be responsible for filling out the loan paperwork on the bank’s end.
2. Perform jobs for commercial clients. For commercial clients you may produce financial ratios with computer programs, help improve commercial supply chains, manage sales and marketing departments, ensure companies make payments on time, and reduce credit exposure. On the service end you may deal with verifying transactions as well as handle disputes. Sometimes you will be doing this alone, and sometimes in teams.
   • For example, you may get a job with a credit union and be responsible for handling all dispute from workers from a local clothing manufacturer. You can use the industry learning skill here.
3. Look for employment in the right fields. Broad education in finance will have prepared you for work in many fields as a credit analyst. You can look for positions including: deposit credit intermediation; commercial credit analysis; non-deposit credit intermediation; managing companies; monetary authorities (banks); lessors of real estate; financial investment activities; securities and commodity contracts intermediation and brokerage; insurance related activities; automobile manufacturers; automobile dealers; automobile credit and loan departments; retail store credit departments; and other company credit departments. Use the certification agencies’ job boards.
4. Be diligent on the job. Credit analysts need to be diligent, or pay attention to detail. You need to make sure no numbers, money, financial notes or the like are missing on reports or income sheets. You need to keep accurate records of payments and cash flow so your recommendations are based on complete information on your clients.
5. Hone your quantitative analysis skill. This is your ability to understand sets of numbers. You will be presented with many data sets on a daily basis from credit reports, to payrolls, to purchasing histories, and similar. You need to be able to look at these numbers and use your financial education to interpret the data.
6. Write and speak clearly to people. This should happen within your financial field and out of it. This is particularly important to those who won’t understand financial jargon. While your financial firm’s superiors may understand business terms—your client may not understand them at all. You need a way to translate complex financial charts and analyses into plainly worded explanations—in in conversation or written form.
7. Learn other industries. This will help with financial data that may be important to specific businesses like energy, or textiles. If you are getting credit data from particular financial sectors of the economy, then you will want to know their inner-workings to apply your recommendations in a way that is practical for that sector.
   • An example of this could be the oil industry. If you are doing credit analysis for an oil company, then you want to know their production methods better so you can recommend changes that will take into account their refinement process, drilling costs, environmental conditions, and political situation.
8. Be ready to multitask. Completing projects efficiently is a good skill for a credit analyst. You’ll likely have many clients with numerous financial reports to process. You will have to decide which client has the most pressing deadline, which one will take the longest to complete, and pace out the workload with the time given to work with each client.
9. Work with financial software. Having experience with financial software is also of great importance now. Common spreadsheet software tools like Microsoft Excel, presentation software, online meeting tools, and mobile apps are all good technologies to become comfortable with. You will be able to keep up with large amounts of financial data, organize it, and communicate it to many people more effectively.
   • A lot of these software packages have tutorials that are worth going through if you are totally unfamiliar with the program.
   • Many of these programs also have “home,” “office,” or “professional” versions. These will have different features activated and may or may not come with limited time to use them. Ask your employer if you can take home a copy of the better version.
10. Apply for a job. Put your schooling, financial work experience, and certifications on your résumé. Send those into your jobs when you apply. Apply to banks, investment firms, real estate firms, automobile dealerships, department store home offices, credit rating agencies, and look on online job boards for similar positions. Describe your skills in more detail in your cover letter. Submit your transcripts from school and references if requested.
    • The U.S. Bureau of Labor Statistics (BLS) predicts that general positions in the financial sector will increase by 10-20 percent between 2004-2014. Salaries vary greatly by state, but range from $60,000 to $100,000.

Tips

• Some companies will offer on-the-job training to certify you for an analyst position if you don’t have a finance-based degree. However, you may need a bachelor’s or graduate level degree in another field.
• A credit analyst can make $60,000-100,000 a year.

Warnings

• Credit analysis is a high-stress job with the financial well-being of an individual or whole company resting on your decisions.
• Fees for certifications can be high, as can the time it takes to get them.

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