A credit analyst measures the creditworthiness of a company or an institution and facilitates credit risk management. Usually employed by banks, smaller investment companies and credit card companies, their general job role involves assessing whether a loan applicant is creditworthy or not. By first gathering relevant to the same and post a detailed analysis of the same, they either approve or disapprove the credit application of the applicant. Credit analysts employed with larger financial institutions also have the added responsibility of monitoring if a client is at a possibility of defaulting if an applicant’s account needs to be closed or a client needs an extension on his line of credit.
What is the Job of a Financial Analyst Different from that of a Credit Analyst
Often sounding similar, the job of a financial analyst involves working on a much larger scale. He assesses the creditworthiness of a business or a company. A counterparty or an investor risk is always involved in this case, along with a lot of involvement in foreign bank sectors, interbank funding, lending and borrowing of securities, or foreign exchange. It is also a financial analyst’s responsibility to measure and forest the risk of both the counterpart and its settlement, before getting into the process of lending. Also, it is a must for financial analysts to conduct thorough research of any market or sector that involves a potential business, often on the basis of which they are required to build financial models to forecast potential situations that may arise in the future.
Qualifications Needed for a Credit Analyst to Become a Financial analyst
Most credit analysts need to have a bachelor’s degree in accounting, finance or mathematics, however, on-the-job training is often provided to individuals with a degree in any of these fields. Some employers require credit analysts to have completed a CFA (Chartered Financial Analyst) course, depending on what level they have been hired at. Often, to be hired at higher designations, credit analysts need to have some relevant work experience as well.
To become a financial analyst, an undergraduate degree in accounting, mathematics, business, finance or economics comes of use. In certain situations, a degree in engineering or computer science or an MBA increases prospects of being hired as a financial analyst. You are an experienced credit analyst, completing a CFA course may turn out to be useful for you before you turn your career path from a credit analyst to that of a financial analyst.
In relevance to required skills, both professions are fairly similar since decision making skills are important in the financial avenue, the only difference being, credit analysts are more centric towards individuals and smaller companies whereas financial analysts are more focused on financial institutions, larger business organisations and market trends. Both the fields need a strong background in analytics and affinity towards strong, well-built research.
After completing the relevant degree, here are a couple of steps in which a credit analyst may purse the career of a financial analyst:
- Bag an internship- As mandatory as this might not be, a financial analyst internship may give you that initial boost in your career. While you can gain hands-on training here, you can also get a clearer picture of the career switch that you have decided to make along with the kind of work expected to come your way. Also during an internship, you can build networks with other experienced financial analysts or find yourself a mentor to guide you on your career journey. Networks built during internships often last all through your career. Also, an internship increases your chances of being hired as an entry-level financial analyst as well.
- Secure a job- Post completion of an internship, you can pursue entry or mid-level financial analyst designations; not only do stints like these help you gather relevant industry experience but also brush up your weaker skills. Tasks like analysis of income statements, maintaining financial statements or working on financial models along with forecasting models only help you work your way up the career ladder.
Once you have achieved all relevant milestones in the path of becoming a financial analyst, including meeting educational requirements, relevant industry experience, certification of a CFA course and an entry or mid-level job to start out with, your quest to pursue a career in the same will be rewarded for sure.