Overview
Since decades, credit analysis and credit risk evaluation has played a crucial role in the growth of the financial industry in India. Credit analysis helps to shape the creditworthiness of applications seeking credit facilities with the help of specific tools and techniques employed by credit analysis professionals. The system entails careful analysis of the financial and non-financial aspects of the applicant to comprehend the borrower’s ability to repay borrowed funds. Here is where the concept of financial analysis comes into the picture.
In order to gain such skills, there are a variety of certifications available focused on financial analysis, accounting, credit management, credit analysis, business valuation, risk management, banking, investments, etc. Read further to find out more about the certifications you can explore in credit analysis, their need and importance, the manner of obtaining certifications, and more.
What are Credit Certifications?
Credit management is a crucial aspect of the risk management practices within an organization. It encompasses functions such as credit evaluation, their status, whether individual or a business enterprise, financial health, etc., which ultimately helps to determine whether or not to extend credit to the prospective borrower. Hence, businesses and financial institutions hire credit analysis professionals who employ their knowledge and experience to help make such business decisions.
Credit analysis certifications are specialized courses that are specifically designed to equip finance enthusiasts to develop advanced skills and knowledge, including subjects such as financial statement analysis, risk assessment, business plan evaluation, etc., to help credit evaluation of individuals and business entities. Apart from gaining such vital skills, finance professionals look forward to such credit certifications to boost their job prospects and get into higher ranks of their professional careers. Financial institutions, credit bureaus, and investment banks employ such specialized professionals, with credit certifications offering them an additional level of expertise.
Importance of Credit Certification
Types of Credit Certifications
Credit Risk Certification (CRC)
The Credit Risk Certification or (CRC) is a professional accreditation bestowed by the Risk Management Association (RMA) since 2002. Typically, the Credit Risk Certification CRC professionals are equipped to work in the vast area of credit risk, operation risk, and market risk and meet the basic requirements of enrolling in the course.
The aspiring candidates need to have at least five years of experience in the commercial credit and lending sector, and on passing the certification, become active members of the RMA. Applicants shall also have working knowledge of the concepts related to financial statement analysis, financial accounting, commercial credit, and tax return analysis.
The Credit Risk Certification CRC examination requires completion of at least 45 units of continuing education coupled with courses and attending professional events organized by the RMA in a duration of three years. Successful applicants are permitted to add the designation of Credit Risk Certification CRC to their names, which boosts their reputation, job prospects, and promotion-related prospects.
In order to qualify for the professional certification, the RMA recommends studying for 40-80 hours in addition to a 5-hour practice exam to fulfill preparation for 126 multiple-choice questions. Applicants shall have the option to sign up for either April or October session.The examination covers several aspects of credit risk assessment, including
- Accurate assessment of the client industry and market trends;
- Evaluation of the management’s efficiency to formulate and adopt business strategies;
- Fulfilment of client evaluation of the client;
- Analyzing the strength of cash flows for the client;
- Periodical assessment of the collateral value;
- Repayment source identification;
- Detection and identification of solutions for loans.
Credit Business Associate (CBA)
The Credit Business Associate (CBA) certification is awarded from the National Association of Credit Management (NACM). The NACM conducts the CBA exam three times a year (May, July, and November) in the NACM affiliate offices.
The CBA designation is primarily focused for aspirants looking to build their careers in credit management engrossed within three areas including financial statement analysis, financial accounting, and business credit principles, credit law, business law, and financial statement interpretation.
Unlike other credit certifications, the CBA exam does not have any pre-eligibility criteria regarding work experience in the credit industry and comes across as an ideal choice for college graduates. However, aspirants registering for the CBA certification ideally have to complete basic courses in financial statement analysis, business credit principles, and financial accounting as part of the curriculum.
CBA certification exam has a duration of three hours containing around 150 multiple choice questions and the candidates are allowed to use calculators to calculate numbers while preparing financial statements. Applicants scoring either 70% or above are successful to obtain this professional credit certification.
Certified Credit Executive (CCE)
Certified Credit Executive or CCE exam is an executive level professional credit certification which enables professionals to manage their credit analysis related responsibilities at the highest level of management.
Professional aspirants who seek to obtain a CCE certification are required to give the credit certification exam demonstrating an in-depth knowledge of credit, financial, and legal topics with management, domestic and international credit concepts, accounting, and finance.
The rigorous examination is of three hours duration divided into two sections, one containing shorter answer questions while the other section includes case studies related questions. In order to qualify, a candidate needs to secure at least 70%.
Successful applicants need to renew their membership every three years through payment of a specific fee and completion of continuing education and participation points. The criteria for grant of CCE requires a certain blend of work experience as well as educational qualifications.
Any aspirant seeking CCE certification shall meet any of the following conditions –
- At least ten years of experience in credit management along with 125 career roadmap points.
- To have accomplished the CBA and CBF professional credit certifications along with 125 career road map points.
- Holds a total professional experience of fifteen years or more along with 125 career roadmap points. The applicants shall be fifty-seven years or older.
- The applicants enrolled in a Graduate in Credit and Financial Management program and have completed the second year.
Commercial Banking and Credit Analyst
Banking professionals wishing to explore credit analysis and credit risk management industries could choose this professional credit certification to help them advance their careers in the commercial lending space. Aspirants who are able to pass the examination will have in-depth knowledge of areas such as financial analysis, risk management, industrial analysis, management and business analysis, and credit structure and documentation.
In order to take the examination, the applicant shall complete sixteen main courses, which include interpretation of business financial information, loan pricing, etc. Further, the applicants need to complete three elective sequences and explore other advanced matters, such as commercial debts, syndicated lending, private banking, etc. Now, finally the applicant shall be required to pass the credit certification examination with at least a 70% score to succeed in the exam.
Certified International Credit Professional
For professionals wishing to gain expertise in global credit management and risk analysis, the Certified International Credit Professional, or CICP, is an ideal choice. Banking professionals such as credit analysts, accounts receivable specialists, assistant credit managers, controllers, corporate credit managers, etc., could choose this certification to enhance their knowledge and industrial reputation. The CICP accreditation allows the professionals to not only build a professional network but also to create a better connection and interact with like professionals and facilitate the exchange of ideas and experiences while also accessing job opportunities overseas.
The examination curriculum comprises twelve study modules focused upon marketing credit products beyond domestic boundaries, comprehensive credit policies and procedures, emerging credit applications, and country-wise currency risks. Financial statement analysis, risk mitigation, payment terms and credit lines, global payment mechanisms, letters of credit, guarantees, and bonds, etc. are some of the study areas focused upon. The candidate needs to pass twelve quizzes followed by a final examination to qualify for the examination.
Credit and Counter party Risk Management
Credit and Counter party Risk Management, or CCRM, accreditation is yet another professional credit certification focused upon the premise of helping credit analysts to build functional understanding of the credit risk analysis frameworks and the tools and techniques helpful to fulfil and efficiently manage their responsibilities in a financial institution. Some of the study areas in the modules include advanced credit risk modelling, risk mitigation, fundamentals of counter party risks, credit valuation modifications, credit products, credit portfolio management, etc.
The CCRM certification verifies the capability of a professional to recognize diverse credit risk sources, plan structure for credit and market risks, comprehend risk mitigation, and use technological programs for credit risk. Furthermore, enrolment in the credit certification course also enables access to the CCRM digital handbook for 36 months with the opportunity to take an online examination.
Credit Business Fellow (CBF)
CBF is yet another professional credit certification awarded by the National Association of Credit Management (NACM) for individuals having certain experience in credit management. The CBF designation shows professional experience and deep knowledge of business laws, credit regulations, interpretation of financial statements, and evaluation of credit risk. Typically, it supplements the CBA coursework and work experience, which are necessary to obtain CBF certification. Thus, in order to be eligible, the applicants shall have a valid credit certification of the CBA exam conducted by the NACM.
Furthermore, the applicants shall be required to offer adequate evidence of at least 75 career roadmap points. The applicants approved by the NACM are required to complete a three-hour exam containing questions, out of which successful applicants shall score 70% or more.
Need and Importance of Credit Certifications
- Boosts resume credentials: The primary advantage of adding such professional credit certifications to your resume is that it allows applicants to improve their resumes, which demonstrate professional capabilities, credibility, and knowledge.
- Develop leadership opportunities—Gaining credit risk certifications opens doors for opportunities at leadership positions where credit certification holders could establish their focus to assure organizational growth to the management and gain leadership positions.
- Demonstrate professional skills—Passing the exam and fulfilling the credit certification requirements demonstrate skills and knowledge of the individual and understanding of the risk assessment to the potential employers.
- Build a professional network of like-minded professionals. Credit risk and analysis credit certification programs also offer plenty of opportunities to access networking platforms, which allow professionals to connect with each other to discuss key issues and grow in their careers.
How to earn the Credit Certification or Credit Analysis Certification?
Identify if you meet the criteria
Credit analysis certifications have prescribed eligibility conditions and the applicants need to follow the step wise process with basic understanding of intermediate credit risk processes. Other than this, there may be other eligibility requirements that shall be checked thoroughly, as the application fee may or may not be refundable.
Apply for the Credit Analysis Certification on their official site.
The application shall be filed from their official website by clicking on the application form and submitting the details. Usually, the application verification requires 10-14 days with the candidates to receive notice within three weeks of application status specifying the examination center and the rules for writing the examination.
Prepare for the Credit Analysis Certification Examination.
Preparation of credit certification necessitates the fulfilment of modules and the practice exam for which samples could be found on the concerned institute’s websites.
Complete the examination on the required day and time.
The examination could be taken online, which shall be monitored by a proctor. The applicants should mark answers for questions, and where they face any uncertainty, they could pay an additional fee for retaking the exam if they fail at the first.
Fulfil continuing education requirements.
Applicants who are successful in passing the exam will receive the credit risk certification with credentials that could be applied for continuing education requirements. Later, submit proof of credit along with a renewal fee for maintaining the credentials.
Conclusion
Therefore, credit analysis and risk management credit certifications add great value to the skills, knowledge, and career prospects of the aspiring professionals. Therefore, these courses evaluate the creditworthiness of individuals/organizations through quantifiable financial data analysis. Credit analysts are widely in demand for various corporations, including financial institutions, businesses, credit bureaus, investment banks, etc. However, before making any decision on whether to pursue any course, aspirant professionals shall consider the long-term benefits of the professional course and returns for the time and money invested in the course in terms of a robust career. These are the people who will eventually evaluate your loan applications in the lending institutions, like the banks and NBFCs. They are responsible for the internal ratings done by the lending institutions before loan approvals and renewals.