Credit Analyst vs. Underwriter: What Are the Differences?

A career in finance can be both exciting and rewarding. Two common positions in this field are that of a credit analyst and an underwriter. Though these positions share some similarities, there are several key differences between them.

In this article, we discuss the differences between a credit analyst and an underwriter, and we provide additional finance-related professions you may be interested in pursuing.

What is a Credit Analyst?

Credit Analysts work in the financial industry to evaluate the creditworthiness of individuals or businesses. They use financial reports and other data to assess the ability of a borrower to repay a loan. Credit Analysts also develop credit ratings for companies and provide recommendations to lenders on whether to approve a loan and at what interest rate. They may also work with borrowers to improve their credit rating. Credit Analysts typically work in banks, credit unions, lending companies or financial services firms.

What is an Underwriter?

Underwriters are responsible for assessing the risk of insuring a home, car or individual. They work for insurance companies and use their analysis to determine whether or not to provide coverage and at what rate. Underwriters typically have a four-year degree in business, economics or a related field. They must complete on-the-job training to learn the specific software and rating systems used by their company. Once they are fully trained, they use their knowledge of the industry to evaluate each case and make a decision.

Credit Analyst vs. Underwriter

Here are the main differences between a credit analyst and an underwriter.

Job Duties

One of the biggest differences between an credit analyst and an underwriter is the type of duties they perform. Credit analysts work with clients to help them improve their credit scores, which can include things like advising them on what types of credit to apply for, helping them manage their current credit accounts and suggesting new ways to build their credit history.

Underwriters, however, have a more specific job duty related to approving or denying applications for loans. They may use the information from credit analysts to make decisions about whether to approve or deny a loan application, but they also consider other factors, such as the value of collateral offered with the loan and the financial needs of the borrower.

Job Requirements

Credit analysts and underwriters typically need a bachelor’s degree in business administration, finance or another related field. Some employers prefer candidates to have a master’s degree as well, but it is not required for entry-level positions. Additionally, many credit analysts and underwriters pursue certifications through the Credit Research Foundation (CRF) or the American Bankers Association (ABA). These organizations offer training programs that teach professionals how to use credit analysis software and other tools they might need on the job.

Work Environment

Credit analysts typically work in an office setting, but they may also travel to meet with clients. Underwriters usually work in a call center or office environment where they can communicate with customers and agents. They may also travel to visit sites and evaluate the risk of lending money to them.

Underwriters often work long hours during peak times like tax season when there is more demand for loans. Credit analysts may work overtime during busy periods as well. Both professionals may work weekends and holidays depending on their employer’s needs.

Skills

Both credit analysts and underwriters use financial analysis skills to assess the risk of lending money to individuals or businesses. They also both need to have excellent research skills to investigate an applicant’s financial history and current circumstances.

Credit analysts tend to focus more on reviewing an applicant’s financial statements, such as tax returns, bank statements and asset declarations. They also may contact references provided by the applicant to get a better sense of their character. Underwriters also review financial statements and other documentation, but they also may order additional reports, such as property appraisals, to get a complete picture of an applicant’s financial situation.

Both credit analysts and underwriters need to be able to evaluate risks and make sound decisions about whether to approve or deny loan applications. However, credit analysts typically provide recommendations to underwriters, who then make the final decision about whether to approve or deny the loan.

Salary

Credit analysts and underwriters both work in the financial industry, but they have different roles. Credit analysts earn an average salary of $60,854 per year, while underwriters earn an average salary of $68,337 per year.