What Does a Credit Analyst Do?

Who is a Credit Analyst?

A credit analyst is someone responsible for evaluating the risk factors that affect loans and debts. Credit analysts are trained individuals who have a financial background in examining loan applications. They are different from loan officers who assist clients throughout the loan process. Instead, credit analysts examine a client's creditworthiness and background.

The use of credit analysts during a loan process has become more prevalent in recent times. Credit analysts may work in financial institutions or credit agencies to carry out their tasks. Credit analysts collect critical financial information about a client and evaluate it using financial ratios and other techniques.

What does a Credit Analyst do?

Primarily, credit analysts examine a client’s creditworthiness through their past transactions. However, they also perform several other duties during the loan application evaluation process. Some of the roles and responsibilities that credit analysts perform are as below.

Credit risk evaluation

One of the primary tasks that credit analysts carry out is evaluating a client's credit risk. They do so by examining their past savings information, earnings from various sources, debt repayment history, and other related dealings. Once they analyze this information, they can form an opinion about the client's creditworthiness using a credit rating.

Client and product support

A credit analyst is also responsible for setting up meetings with existing and potential clients. The analyst is responsible for obtaining information on the client's financial background. The credit analyst also identifies the client’s needs and objectives for receiving the loan. Similarly, the analyst assesses the client’s earnings and spending capacity. Lastly, the credit analyst promotes credit lines and products to clients.

Credit limit control

Credit analysts also review the credit limits for existing customers in case they want to increase their credit. The analyst will evaluate the borrower’s repayment history, default history, and earnings information to make a decision. Similarly, the credit analyst will make recommendations to the lender on whether to increase or decrease a client’s credit limit based on their dealings.

Financial data analysis

Credit analysts also analyze financial data related to potential and existing clients. It is one of their primary responsibilities. Based on this analysis, credit analysts can make decisions about clients. Usually, credit analysts use various financial ratios to determine their suitability for credit terms. The credit analyst also examines the client’s risk levels to evaluate their credit risk.

Assisting the manager

Credit analysts also assist the manager before approving a client. Usually, they do so to ensure the client meets some requirements for obtaining credit. These include collecting information and processing files, contacting other financial institutions to verify information, examining clients' assets and finances, etc. The objective of these checks is to help in the decision-making process.

Record maintenance

Credit analysts are also responsible for maintaining detailed records relating to clients. Credit analysts ensure they have an accurate and up-to-date list of the annual reviews required by credit regulations. Similarly, they handle records related to the progress of new client applications and those already approved. Credit analysts also prepare monthly and quarterly credit reports.

Conclusion

Credit analysts are trained individuals who have a prominent role in a loan application process. These individuals evaluate risk factors that affect loan and debt applications. Similarly, credit analysts perform various duties in an institution. These include credit risk evaluation, client and product support, credit control limit, financial data analysis, assisting the manager, and record maintenance.

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