A credit research analyst is responsible for researching an individual’s (or company’s) credit history and financial information to help determine how creditworthy they are. The analyst must look deeply into the personal and financial background of every credit applicant to help the lender determine if the applicant is worth the risk of offering credit or a loan.
The primary task of a credit research analyst is – as the name suggests – to research the applicant. It means gathering and reviewing a lot of information, which includes income statements, balance sheets, and any other pertinent information.
A credit research analyst is responsible for gathering information about applicants seeking a loan or line of credit, helping the lender determine how creditworthy the applicant is.
A credit research analyst uses things such as income information, credit history, and balance sheets to help determine how risky it is to offer a particular applicant a loan or line of credit.
The only real educational requirement for a credit research analyst is high school education; however, employers are more likely to select an individual with some college education or a degree in finance and/or business-related fields.
Responsibilities of a Credit Research Analyst
After successfully researching and uncovering an applicant’s pertinent information, the credit research analyst must then compile the numbers. The analysts typically work for banks, financial institutions, and other organizations that loan money or extend lines of credit.
Lenders take into account a variety of factors, including how many loans/lines of credit an applicant has been given, if they have outstanding debt and how much, what type of job they have, and prospects for future income.
Using all the data collected, the credit research analyst must use common analytics and formulas to come up with a basic assessment of overall risk. The process, essentially, provides the lender with the following information:
History of loans/lines of credit
How quickly/successfully the applicant has repaid debts
How much income/financing the applicant has or will have to repay new debts
The abovementioned information is critical to lenders because it helps them get a better understanding of the applicant and how likely they are to repay debts. The more efficiently an applicant has repaid past debts (in an economical and timely way), the less risky the applicant is considered. If a lender must choose between several applicants, it is most likely to select the applicant with the lowest level of risk.
Educational Requirements and Salary Information
While the only real requirement to be a credit research analyst is high school education, employers tend to look more favorably on candidates with at least some college courses to their credit. Candidates that have a college degree – namely in the areas of business, finance, math, or another financially-based area – are bumped to the top of the list of consideration for a position.
The salary for a credit research analyst depends on several factors, such as the area where the analyst is working, the type of company employing the analyst, and the type of education of the analyst. As of 2019, the average US salary for credit research analysts is around $62,000 per year. The analysts may also earn a commission on the cases that they work on. It depends, again, on the nature of the company employing the analyst and whether the company makes money off of the applicant.
CFI offers the Financial Modeling & Valuation Analyst (FMVA)™ certification program for those looking to take their careers to the next level. To keep learning and developing your knowledge base, please explore the additional relevant resources below:
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