Financial Analyst vs. Credit Analyst: What Are the Differences?

A career in finance can offer many opportunities for those with the right skills and qualifications. Two popular positions in this field are financial analyst and credit analyst. Both of these roles require strong analytical and mathematical abilities, but there are several key differences between them.

In this article, we discuss the differences between financial analysts and credit analysts, and we provide information on the skills and qualifications you’ll need for each role.

What is a Financial Analyst?

A Financial Analyst is a professional who performs financial analysis, which is a type of work that is concerned with forecasting financial performance and managing financial risks. Financial analysts are employed in a variety of industries, including banking, insurance, accounting, and investment. They typically have a bachelor’s degree in finance, accounting, economics, or a related field. Financial analysts use their skills in math and financial modeling to analyze past financial data and make predictions about future financial performance. They also use their analytical skills to identify financial risks and opportunities for their company or clients.

What is a Credit Analyst?

Credit Analysts work in the financial industry to assess the creditworthiness of individuals or businesses. They review credit reports, financial statements and other information to evaluate the risk of lending money to a particular borrower. Credit Analysts typically work for banks, credit unions, lending companies or investment firms. They make recommendations to their employer about whether to approve or deny a loan, and they may also set the interest rate for approved loans. Credit Analysts must have strong analytical and math skills to effectively assess risk and make sound decisions.

Financial Analyst vs. Credit Analyst

Here are the main differences between a financial analyst and a credit analyst.

Job Duties

Financial analysts and credit analysts perform some of their job duties in similar ways, such as researching financial data and using it to make predictions about future events. However, the specific tasks they complete differ because of the type of information they work with. For example, a financial analyst might use historical sales data from a company along with demographic information about its customers to predict how a new product will perform if the company introduces it. In contrast, a credit analyst might assess whether a particular borrower is likely to repay their loan by studying the borrower’s current financial situation and repayment history.

Job Requirements

Both financial analysts and credit analysts need at least a bachelor’s degree to enter the field. However, many employers prefer candidates who have a master’s degree in business administration, economics or another related field. Additionally, both professionals may pursue certifications through organizations like the Financial Industry Regulatory Authority (FINRA) or the Institute of Certified Financial Analysts (ICFA). These certifications can help analysts stand out to potential employers and show that they have the skills and knowledge necessary to excel in their role.

Work Environment

Financial analysts and credit analysts work in different environments. Financial analysts typically work for financial institutions, such as banks or investment firms. They may also work for companies that provide services to financial institutions, such as software developers. Credit analysts usually work for lenders, such as banks or mortgage companies.

Financial analysts often spend their days working at a desk in an office environment. However, they may travel occasionally to meet with clients or attend conferences. Credit analysts may spend more time on the road than financial analysts because of their job responsibilities. They may visit clients’ locations to evaluate potential loans or conduct audits.

Skills

Both financial analysts and credit analysts use analytical skills to examine data and make recommendations. Financial analysts typically focus on a company’s financial statements when making their recommendations, while credit analysts focus on an individual’s or business’ credit history.

Both of these professionals also need to have excellent communication skills. Financial analysts often present their findings and recommendations to upper management, so they need to be able to clearly articulate their thoughts. Credit analysts may interact directly with customers, so they also need to have strong people skills.

Organizational skills are important for both financial analysts and credit analysts. Financial analysts need to be able to keep track of multiple projects at one time, as they often work on more than one analysis at a time. Credit analysts need to be able to organize the large amount of data they collect on individuals and businesses.

Salary

The average salary for a financial analyst is $71,352 per year, while the average salary for a credit analyst is $60,854 per year. Both of these salaries can vary depending on the size of the company, the location of the job and the level of experience the analyst has.