Pros and Cons of Becoming a Credit Analyst
Credit analysts need to know credit regulations and understand the financial risks associated with giving credit to clients who might easily default. Check out all of the pros and cons to see if becoming a credit analyst is right for you.
| Pros of Becoming a Credit Analyst |
|---|
| Solid job growth (projected increase of 10% between 2012 and 2022)* |
| Pay is higher than the median salary of jobs that require a bachelor's degree (approximately $67,000 for credit analysts)* |
| Variety of work activities (preparing reports, analyzing data to determine risks, talking with customers and other business professionals)** |
| Can choose to work in multiple industries (credit intermediation, auto dealers, securities and commodities)* |
| Cons of Becoming a Credit Analyst |
|---|
| Bachelor's Degree is usually required** |
| May have to deal with angry customers and send accounts to collection agencies** |
| May have to work more than 40 hours in a week*** |
| Must make accurate assessments to ensure that lending risks aren't too high** |
| A lot of time is spent sitting and working at a computer, which can lead to back strains, wrist injuries and eye strains** |
Sources: *U.S. Bureau of Labor Statistics, **O*Net Online, ***Murray State University.
Essential Career Info
A credit analyst looks at financial information to determine how much risk is involved with lending money to a customer or client. Credit analysts will look at a number of factors to determine if credit should be extended to a client, such as examining credit histories, comparing profitability to similar establishments and talking to credit associations. This job heavily relies on computer technology to analyze financial data. You'll use a variety of software programs to make calculations and predict how much profitability is expected from loan. You may have to deal with customer complaints, so you should be prepared to handle some unpleasant interactions.
Salary Info and Career Prospects
According to the U.S. Bureau of Labor Statistics (BLS), credit analysts earned an annual median income of about $67,000 in 2014. The BLS found that the top 10% of credit analysts earned more than $126,000, while the lowest 10% earned less than $40,000.
The BLS predicted that credit analysts would see a 6% increase in job opportunities between 2014 and 2024, which was about as fast as the average for all occupations. States with the highest levels of employment for credit analysts include New York, California, Texas, Ohio and Florida.
Education and Training Requirements
Credit analysts typically need a bachelor's degree for most entry-level positions, but much of their training comes from the employer. This is because most credit-granting institutions have unique standards for giving credit to a client and are willing to teach entry-level personnel about federal guidelines. Some of the majors that can help you prepare for a credit analysis career include finance, business administration and economics.
What Employers Are Looking For
Employers are looking for applicants who have strong communication skills and know how to use industry-related software programs. A bachelor's degree was also usually requested by employers. Here are some sample job posts that advertised for credit analysts in May 2012:
- A credit union in Wisconsin was seeking a credit analyst to analyze financial statements and perform loan reviews. Applicants need to have a bachelor's degree in accounting or finance or have equivalent experience.
- A finance company in New Jersey advertised for a credit analyst who would be responsible for writing credit memos, approving credit and analyzing financial statements. Candidate needs to have a bachelor's degree and experience in the retail/fashion industry.
- A company in Maryland was looking to hire a senior credit analyst to oversee all credit and debt collection actions. A bachelor's degree plus at least three years of experience was required. Candidates should know how to use credit software tools and have strong communication skills.
- A leasing company in Pennsylvania advertised for a credit analyst with at least five years of experience in credit underwriting. Candidates need to have at least a bachelor's degree, while an advanced degree was preferred.
- A national bank in California wanted to hire a credit analyst who would be responsible for maintaining a quality loan portfolio. Candidates should have a bachelor's degree plus at least two years of experience in commercial underwriting. Knowledge of bank regulations and strong communication skills were also listed.
How to Stand Out in the Field?
Gaining knowledge and experience in the specific industry you wish to work in can give you an edge over other applicants who have the same education but have experience in a different industry. Having an understanding of federal credit and lending regulations could also give your job search a boost. Since many employers want people who have strong communication skills, you may want to take some elective courses that focus on these skills while you pursue a bachelor's degree. You may also be able to get ahead by becoming proficient with computer programs that are commonly used by credit analysts, including Microsoft Excel, database software programs and Web portals.
Other Careers to Consider
Cost Estimator
If you still want to use numbers to make estimates but a career in credit analysis isn't right for you, you might be interested in becoming a cost estimator. These professionals figures out how much labor, time and money is needed to make a particular product or complete a construction project. Cost estimators often calculate the costs for long-term projects or investments. Similar to credit analysts, you'll need a bachelor's degree with a strong background in math. You'll also need industry-specific experience (e.g. if you want to estimate for construction projects, you'd need to have experience in the construction industry).
Cost estimators earned a median annual income of about $58,000 in 2011, according to the BLS. You should also have many job opportunities as a cost estimator; the BLS projected a 36% increase in job openings for these professionals between 2010 and 2020.
Personal Financial Analyst
As a personal financial manager, you'd be helping customers make important investment and tax decisions. A personal financial advisor may sell stocks, bonds, and other financial services. They also consult a client on specific investment strategies for increasing income, finding insurance, securing an estate and preparing for any radical financial changes in a client's life, such as a lost job, a death in the family, or getting married. A bachelor's degree is typically required for this profession. You should have solid earning potential, as the BLS reported that personal financial analysts earned a median salary of approximately $67,000 in 2011. Job growth should also be good for personal financial analysts, since the BLS predicted that they would see a 32% increase in jobs from 2010-2020.
