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Credit Risk Analyst

A professional who reviews an applicant's loan application and their capability and willingness to repay the loan

What is a Credit Risk Analyst?

A credit risk analyst is important – specifically for lenders – because he or she analyzes how risky it is to extend a loan or other credit to an individual. A credit risk analyst reviews an applicant’s loan application for credit or a loan and – along with careful dissection of the applicant’s financial information – determines if the applicant possesses both the income necessary to repay the loan and the willingness to do so. The information is based on both the applicant’s financial records and on his or her credit history.

 

Credit Risk Analyst

 

Credit risk analysts perform the same functions for companies applying for credit or a loan as well. It is more commonly known as commercial credit risk analysis. Understanding if a company is capable of repaying a loan or line of credit is critical for lenders because the money offered is typically a much larger sum than that offered to individuals.

 

Summary: 

  • Credit risk analysts help lenders and companies understand how creditworthy a potential borrower is.
  • They must review the applicants’ financial information and history of credit to help make a determination about how creditworthy they are.
  • While it is not required to have more than a high school education to be a credit risk analyst, most employers look for at least some college credits before hiring.

 

Reviewing Financial Information

The financial information that must be reviewed for a potential loan or credit recipient is largely the same regardless of the applicant. The information reviewed includes (but is not limited to):

  • Income
  • Checking/savings accounts
  • Credit history
  • Loan history
  • Balance sheet

 

If a client lacks current or a history of savings, enough potential income-earning power, or shows a high ratio of debt, the credit risk analyst will likely deny the applicant’s application or ask for additional financial/personal records to get a better idea of whether or not the potential borrower is worth the risk.

Lenders rely on a credit risk analyst’s assessment of applicants to help them determine whether or not it is a good idea to offer the applicant a loan or extend them a line of credit. They also use the analysis to help them determine the maximum amount of money they should offer the applicant.

 

Training and Education for a Credit Risk Analyst

While it isn’t mandatory for credit risk analysts to have more than a high school diploma or GED, it is a plus.

Most employers only require basic high school level education. With that being said, employers are more likely to hire an analyst with at least a few years of college courses under their belts. Studying or majoring in things like accounting, business, or some finance-related field is a definite plus.

Credit risk analysts need to demonstrate excellent problem-solving and people skills as well. They work primarily with companies and lenders, helping them determine if they should offer credit and if so, how much. The analysts may interact with individuals and companies looking to borrow as well. They will, of course, request relevant financial information. However, they may also act as a middleman for credit disputes and resolution as well.

 

More Resources

CFI is the official provider of the global Financial Modeling & Valuation Analyst (FMVA)™ certification program, designed to help anyone become a world-class financial analyst. To keep advancing your career, the additional resources below will be useful:

  • Commercial Credit Analyst
  • Best Personal Finance Software
  • Financial Intermediary
  • Top 10 Accounting and Finance Certifications