Credit Analyst Skills

Essential skills needed for the credit analyst position

What are Credit Analyst Skills?

An individual needs to possess key credit analyst skills in order to be effective in the role. A credit analyst is required to assess a loan application to determine the creditworthiness of a client and make recommendations on whether or not to lend.

 

Credit Analyst Skills

 

For a credit analyst to perform his/her responsibilities effectively, they are required to be skilled in several areas, such as financial analysis, due diligence, multitasking, and attention to detail. The skills can be obtained through formal training or work experience.

 

 

Quick Summary

  • Potential candidates for a credit analyst position are required to possess a variety of skills that can help them perform their roles effectively.
  • Some of the essential credit analyst skills include financial and quantitative skills, due diligence, proficiency in statistical software, and the ability to work under pressure.
  • Credit analysts can acquire the skills by undergoing formal training or by learning on-the-job while working in credit analysis.

 

Essential Skills of a Credit Analyst

The following are some of the skills that employers look for in a credit analyst:

 

1. Quantitative and analytical skills

A credit analyst is required to review different types of financial documents related to a client’s business. The client can be either an individual or a corporate borrower, and the analyst is required to analyze all the information contained in the financial documents. They should be able to identify key areas such as omissions, errors, and fraud that may affect the credibility of the lending process.

A quick review process is required to allow other parties to review the documentation and fast-track the funds’ disbursement to the client’s account. Therefore, the analyst must work within a limited period. It requires the analyst to possess unmatched quantitative and analytical skills to obtain the required data and make a risk level judgment. Such skills can also help the analyst make an informed decision that balances the need to lend to creditworthy individuals and protect the company from unwanted lending risks.

 

2. Due diligence

Credit analysis requires a high degree of caution and care in assessing the financial health of a borrower. An analyst is required to demonstrate great attention to detail when reviewing client documentation. Any error or omission of information that goes undetected can affect the credibility of the review process.

A majority of the borrowers are corporate clients who seek credit running into millions of dollars. It means that if the application is approved without detecting existing errors, the lender will be at risk of losing the funds.

The credit analyst is, therefore, required to be diligent and pay great attention when conducting a review of the client’s financial statements and other documentation. It will help discover errors and omissions that would otherwise go undetected and subsequently result in client defaults.

 

3. Proficiency in financial software

The work of a credit analyst requires incorporating statistical software in the evaluation process to obtain ratios and analyze large volumes of data within a short time. Many credit and financial analysts around the world use Microsoft Excel and other spreadsheet applications.

Credit analysts use Microsoft Excel to analyze and sort large volumes of data, create graphs and charts, as well as generate financial models. Analysts also use Excel formulas to calculate ratios, formulate assumptions, and determine valuations of assets and client’s businesses.

Learning how the software works can be a time-saver for a credit analyst, and recruiters will give preference to such candidates. Credit analysts can learn and perfect their skills by either enrolling in a short course or by incorporating the software in their work routine and learning on-the-job.

It is obvious, therefore, that a majority of credit analysts who are proficient in using financial software are those that have been in credit analysis for a long time. Although inexperienced credit analysts can choose to undergo formal training, they can also get the skills through on-the-job training and mentorship from other credit analysts.

 

4. Ability to work under pressure

The work routine of a credit analyst involves dealing with multiple clients and urgent projects at the same time. Experienced credit analysts may experience a hard time dealing with multiple projects at the same time, and they may fail to meet the set deadlines. In such instances, they must learn how to prioritize urgent tasks first and schedule less urgent tasks. It will allow analysts to meet their clients’ demands and work towards achieving the individual and overall company’s targets.

Dealing with multiple projects with short deadlines can be a stressful event for most analysts, and they must find proper ways of managing work stress without stretching their limits or compromising the quality of work. A good credit analyst should, therefore, be able to handle stress and pressure and, at the same time, deliver quality work on all client projects.

 

More Resources

CFI is the official provider of the Certified Banking & Credit Analyst (CBCA)™ certification program, designed to transform anyone into a world-class financial analyst.

In order to help you become a world-class financial analyst and advance your career to your fullest potential, these additional resources will be very helpful:

  • Bank Credit Analysis Training
  • Credit Analysis Course
  • Top Finance Certifications
  • Types of Due Diligence