Trying to buy a car? Get a mortgage? Find a new round of funding for your tech media startup? At some point, your loan application is going to have to pass through a cold and calculating credit analyst. That person will be what stands between you and a massive payday. (Well, a massive loan that you'll have to pay back. With interest.)

These greenback gatekeepers are the ones responsible for calculating every bit of risk a loaning institution incurs through their lending practices. And because controlling that risk is the name of the game for such institutions, credit analysts play a large part in the institution's success or failure.

 

"I've run the numbers and have determined that I should get a raise." (Source)

Companies pay an average of $75,970 a year for solid analysts, and they have a pretty good idea of what they're getting when they make the hire (source). All credit analysts hold a bachelor's in a subject like finance or accounting, and the best applicants show up with lots of work experience and a few certifications from the National Association of Credit Analysts. 

Investing in the salary of a good analyst isn't much of a risk for big firms—and it's a good thing, too, because until they've hired one, they have no one to assess that risk for them.

So how exactly do these credit cowboys assess the risk of success or failure? Pretty much the same way we might make similar decisions in our lives...but with a whole lot more Excel files.

 

Lizard bias isn't a typical pitfall in credit analysis, but it can happen. Stay vigilant. (Source)

Imagine you've just gotten a voicemail from your friend Samantha, asking you for a $50 loan. Your other friend Tony, who has a bad habit of standing behind people and eavesdropping on their voicemails, immediately advises you against giving her the money. Apparently, she still owes two of Tony's roommates a similar amount. 

Plus, one time she forgot to feed Tony's pet lizard while he was on vacation and it died. On a small and probably very biased scale, Tony has just acted as your credit analyst. Thanks, Tony.

Professional analysts act a lot like Tony on a larger scale (minus the whole eavesdropping thing). They look at the history of potential clients, then determine the client's ability to repay any hypothetical loan the company might consider extending. 

Often, this includes examining income, history with past debtors, and the purpose of the loan. If it's for business, how will this increase profitability? If it's for a house, what's the property value?

Making these decisions requires a sharp analytical mind and a nose for trends. After all, despite the advent of algorithm-driven credit scores—you know, that pesky three-digit number that governs your ability to buy a car or find a good apartment—companies still prefer humans capable of assessing the unique concerns and benefits of certain proposals. 

Plus, humans can take that data and make fancy PowerPoint presentations out of it, then waste everyone's time by presenting findings during Friday afternoon meetings when everyone's just trying to get home already, ugh. Hooray.

So while determining whether or not company A should give loan B to person C is pretty much all a credit analyst does, it's a summary that really doesn't do justice to the amount of time, effort, expertise, and blister-inducing calculations required to actually do it. 

Yes, they may have just one job, but they do it well. Because if they didn't, their employer might be staring down losses of hundreds, thousands, or even millions of dollars. And then the analyst might be staring down unemployment.

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