A credit analyst plays a crucial role in the financial industry by evaluating the creditworthiness of individuals and organizations. They provide insight into the risk associated with lending to various clients, thereby influencing critical lending decisions.
Credit analysts assess financial data, credit reports, and market trends to determine the likelihood of default and help organizations make informed choices about extending credit. If you're looking to establish a clear understanding of what a credit analyst does, this detailed job description template outlines the responsibilities, qualifications, and essential skills needed for this important role.
Whether you’re hiring for your company or exploring a potential career as a credit analyst, this guide will provide you with the valuable insights you need.
1. Evaluate credit data and financial statements to determine the risk involved in lending money to clients.
2. Analyze market trends and economic conditions to provide context for credit decisions.
3. Prepare detailed reports outlining creditworthiness and risk assessments for management or lenders.
4. Monitor existing loans to ensure compliance with terms and identify potential issues.
5. Collaborate with loan officers and management to establish lending policies and risk guidelines.
1. Bachelor’s degree in finance, accounting, or a related field.
2. Strong analytical skills and attention to detail to assess financial data accurately.
3. Proficiency in financial modeling and various software tools, such as Excel or specialized credit analysis software.
4. Excellent communication skills to present findings clearly to management and stakeholders.
5. Experience in credit analysis or related financial services is a plus.
1. Analytical Thinking: Ability to interpret complex financial data and trends.
2. Problem-Solving: Skills to address financial discrepancies and make sound credit decisions.
3. Communication: Proficient in conveying information effectively in reports and discussions.
4. Time Management: Efficient in managing multiple projects and deadlines.
5. Teamwork: Capability to work cohesively within a team and collaborate with various departments.
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Key Responsibilities
1.
- •Review 20–50 loan or credit-line applications per week, verifying income, cash flow, collateral and credit history.
- •Calculate ratios such as Debt Service Coverage Ratio (DSCR), Loan-to-Value (LTV), and Debt-to-Income (DTI) to determine creditworthiness.
- •Why it matters: Accurate underwriting reduces default risk and supports portfolio performance targets (e.g., keep net charge-off < 1%).
2.
- •Analyze balance sheets, income statements and cash flow statements to detect trends, one-time items, and covenant breaches.
- •Use horizontal and vertical analysis plus ratio trendlines over 3–5 years to project repayment ability.
- •Contribution: Identifies early warning signs and informs risk-adjusted pricing.
3.
- •Draft clear credit memos with recommended limits, covenants, and monitoring plans; include quantitative models and scenario stress tests.
- •Present recommendations to credit committee; support Q&A with data and sensitivity analyses.
- •Why it matters: Enables consistent, auditable decisions and speeds approval cycles by up to 30%.
4.
- •Track key metrics for assigned accounts (payment behavior, covenant compliance) and escalate deteriorating accounts into watchlist within 48 hours.
- •Leads to timely workout or restructuring actions to limit losses.
5.
- •Build/maintain cash-flow models and run downside scenarios (e.g., -20% revenue, +200 bps rate rise) to quantify potential losses.
- •Supports capital allocation and provisioning decisions.
6.
- •Communicate with relationship managers, borrowers and legal teams to collect missing docs, negotiate covenants, and implement remediation plans.
- •Clear communication reduces time-to-close and improves client retention.
7.
- •Identify bottlenecks (e.g., average review time) and implement process changes or templates to reduce review time by measurable amounts.
Actionable takeaway: Prioritize timely underwriting, rigorous monitoring, and clear memos to reduce default risk and accelerate approvals.
Required Qualifications
Technical skills
- •Financial analysis & accounting (must-have): Comfortable preparing and interpreting P&L, balance sheet and cash-flow statements; calculate DSCR, LTV, ROE. Use these to assess repayment capacity and covenant design.
- •Excel modeling (must-have): Advanced skills (pivot tables, INDEX/MATCH, macros); build 3–5 year cash-flow models and sensitivity tables. Precision here affects pricing and loss projections.
- •Credit scoring and systems (must-have): Experience with credit-risk platforms (e.g., Moody’s Analytics, SAS, or internal systems) and basic SQL to pull portfolio data; used for scoring and monitoring.
- •Data visualization & reporting (nice-to-have): Create dashboards in Power BI/Tableau to track watchlist trends and KPIs for management.
Soft skills
- •Analytical judgment (must-have): Make documentation-backed decisions under ambiguity; justify approval limits and covenants in memos.
- •Communication (must-have): Write clear credit memoranda and present to committees; negotiate terms with clients and legal teams.
- •Time management (must-have): Manage 30–60 active files concurrently and meet weekly committee deadlines.
Education & certifications
- •Bachelor’s degree in finance, accounting, economics, or related (must-have).
- •Preferred certifications: CFA Level II or above, FRM, or Certified Credit Analyst—these signal greater technical depth.
Experience requirements
- •2–5 years in lending, commercial credit, or credit risk (must-have). Example: underwriting mid-market loans or managing a $50M portfolio.
- •Industry-specific experience (nice-to-have): Commercial real estate, manufacturing, or healthcare exposure helps with sector-specific covenants.
Actionable takeaway: Hire candidates who combine 2+ years of practical underwriting experience with strong Excel and communication skills; prefer certifications for senior roles.