Types of Credit Certifications

What are the Types of Credit Certifications?

Credit certifications are distinctive designations credit professionals obtain to showcase their expertise and knowledge in areas of credit management.

Credit certifications are perceived as a badge of professionalism and expertise in the finance industry. Therefore, certification is defined as a qualification that a person earns to carry out a job.

In this case, a Credit Certification is a qualification obtained by individuals in a specific field to enhance their skills, expertise, and credentials.

It is well known that credit professionals' main focus is determining companies' creditworthiness. Therefore, these certifications are related to the finance industry, and many credit analysts prefer them for career development.

These certifications are offered by revered institutions, such as the Risk Management Association (RMA) and the National Association of Credit Management (NACM).

There are several types of credit certifications that credit professionals tend to do. This qualification is designed to equip professionals with skills in financial statement analysis, risk assessment, financial modeling, and so on. 

Hence, most people who aim to get into the credit analysis division are usually encouraged to obtain certification to boost their qualifications and add another level of expertise to their resume.

Types of Credit Certification

Several types of credit certifications are widely recognized in the finance industry. International associations offer some credentials, while private institutions and universities provide others. However, there are advantages and disadvantages relative to which institute provides the certification.

International associations or institutions mostly provide these different types of certifications. Therefore there is a guaranteed recognition of the certificate, which makes the profession valued in Finance. 

It is not in dispute that credit certifications are also offered by other entities, such as universities and other private parties. 

However, the recognition and notoriety of the certification is an added advantage in Finance. 

An example of a credit certification offered by a non-association entity is Udemy. Udemy provides a Credit Analyst course on its platform, and it is described as designed for credit risk analysts, banks, and credit ratings firms. 

Therefore, in the career of credit analysts, notoriety and recognition of a particular certification are important because they influence whether one will get a job or not. In addition, some big corporations and institutions usually prefer job applicants to possess known certifications.

Furthermore, other platforms like Alison.com offer Credit Analyst training at a prescribed fee. 

Credit Risk Certification (CRC)

This is a certification designed in accordance with Risk Management. Credit risk professionals are a group of experts who work in the finance industry and measure, assess, and evaluate companies' commercial, Retail, and corporate risks. 

Their focus is on reducing their clients' risk exposure and guaranteeing stability. The Risk Management Association offers this designation. 

According to the association, one of the main eligibility criteria for obtaining this certification is to have a minimum of 3 years of working experience in the banking industry. Additionally, the candidate should work in the relevant credit risk division. 

A CRC candidate must register, study all the units, and write the exam. 

A candidate is expected to finish all 45 units of the course and professional events. The association provides study materials for its candidates to prepare for the exams. Additionally, it has recommended 40 to 80 hours of study for the exam.  

The exam costs around $495, and if you decide to reschedule the date, an additional charge of $150 must be paid. 

If a person cancels an exam one week before the exam window, they are entitled to a refund. However, the money is not refundable if you miss the exam window and don't show up for the exam.

If the candidates don't pass the exam, they can retake it at a reduced fee of $250. Lastly, the candidates who pass the exam must pay an annual certification fee to keep the designation. 

Credit Business Associate (CBA)

This is another certification that Credit Analysts obtain in the finance industry. The National Association of Credit Management (NACM) offers this designation.

To acquire this certification, a person must have a background in Finance, possibly an Undergraduate degree. 

This certification has three main focus areas: Basic Financial Accounting, Financial Statements Analysis, and Business Credit Principles. There is no requirement for work experience, and everyone is free to apply, provided they have a background in Finance.

The Credit Business Associate exam can be taken online upon registration. It is a three-hour exam offered three times a year. It is usually provided at national and local NACM-affiliated association offices and at NACM's Credit Congress once a year.

There is a sequence in which the courses are supposed to be taken. 

The first course to be taken is Basic Financial Accounting. It is six months or two quarters long and should be taken online or via an accredited NACM-affiliated institution.

The next course is Financial Statement Analysis 1. It cannot be taken after Business Credit Principles, but it has the same duration as the Basic Financial Accounting Course. Furthermore, it can be taken online, at the NACM Headquarters, or by an affiliate-sponsored institution. 

Lastly, Business Credit Principles is the final course. It has the same duration and conditions as the other two courses. 

Credit Business Fellow (CBF)

The Credit Business Fellow certification is another designation the National Association of Credit Management offers. This CBF designation illustrates that the participants have attained the knowledge and have contributed to the credit analysis profession.  

This program is considered an advanced step because it requires its candidates to have cleared the Credit Business Association CBA certification.

Additionally, this certification requires considerable relevant work experience. Therefore, unlike the other certifications, the CBF has more stringent requirements.  

The Credit Business Fellow Certification demonstrates competence in Business.

The requirements demand that the candidate hold a CBA certification. The candidate must also exhibit the NACM road map showing all the 75 points acquired. When qualified, the candidate can sit for the 3-hour exam offered in three windows a year. 

This exam focuses on two main courses: Business Law and Credit Law. 

However, the minimum pass mark is a C or better in each course to attain the certification. The Credit Business Fellow certification has options for both online platforms and live classroom options.

Therefore, candidates can choose the form of learning which suits their needs. 

Certified Credit Executive (CCE)

The Certified Credit Executive is considered the highest level of the credit certification designation. This level assesses competence at the executive level in credit management functions.

The qualifications for this certification are higher than CBA and CBF certifications by the National Association of Credit Management NACM.  

Candidates are expected to pass a challenging exam covering Accounting, Finance, Management, International Credit Concepts, and Law. 

Unlike the other credit certifications, the Certified Credit Executive has two streams of qualifications.

The following are the routes to qualify for the CCE certification:

The first route is designed for those new to credit analysis and those looking to acquire the skills and knowledge needed to be successful in the credit analysis profession. In addition, this is intended for individuals with the determination to continue higher education. 

This criterion is designed for candidates who are determined to pursue continuing education and higher career goals. In addition, the candidate needs to show a road map of their credit professional achievements, namely the CBA and the CBF. 

To apply to this certification level, the candidate must have accumulated 125 points. However, the applicant is not required to have any work experience under this criterion. 

The second criterion demands a four-year graduate degree alongside ten years of work experience and 125 points earned.

This criterion demands that the applicant have relevant Finance or credit management work experience. In addition, the candidate is expected to exhibit the expertise they have gained relative to finance. 

The third criterion is common among old professionals. Therefore, the terms or requirements are designed to encourage older candidates to apply.

The minimum relevant work experience required by the National Association of Credit Management is 15 years. Therefore, this entry is suitable for candidates 57 years or older. 

Additionally, candidates must also demonstrate a 125-point road map. 

Advantages Of Credit Certifications

Obtaining these certifications offers several advantages to the candidate who can obtain them.

Below are the benefits of pursuing and obtaining the credit professional certification.

1. Notoriety of certification

The Credit Professional certification provides a person with a specific qualification. It is a special qualification on a person's resume and a good achievement for people pursuing credit finance. 

However, it should be noted that there are some more powerful programs, like the Charter for Financial Analyst program, which is more notable than the professional credit papers.

2. Benefits from membership in the association 

Some special benefits stem from being a member of a professional association. Belonging to an international association brings status and prestige. 

The National Association of Credit Management members get special benefits from membership. 

• Through emails, membership provides targeted articles to credit professionals interested in the credit and financial community.
• Members have access to the NACM library, which has an online credit database. They can use it to search by word or concept through the NACM's books, business credit magazine, and eNews and download forms.

• Expos and networking opportunities bring about 2,000 professionals together. For example, NACM's premier educational event provides a forum for exchanging ideas and resources.

3. Networking and Job Opportunities

There are job opportunities for Credit Professional members. However, the main benefit of membership by credit professionals is networking. The National Association of Credit Management allows companies and talent to meet. 

4. An upgrade on the CV

The main benefit of obtaining this certification is that it upgrades a person's CV and Resume. A designation of credit certification is an attestation of knowledge and skill. 

The person with the letters CBA or CCE on their papers has more chance of being employed in a professional credit position than someone who doesn't. 

Disadvantages Of Credit Certifications

This profession comes at a cost and has a few disadvantages that come with the decision to pursue it. 

The following are the demerits of doing this professional program. 

1. There are several fee charges.

The Credit Professional certifications are priced, and they have a cost. For example, for candidates applying under an education department, the cost is $350 for non-members. 

Additionally, the candidates who become members are expected to pay membership fees annually.

2. There is no guarantee of employment. 

Like all other certifications, degrees, or professional programs, there is no guarantee of employment upon completion of the program. 

Therefore, candidates should not expect instant employment upon obtaining the professional credit certification

3. Certifications are narrow in aspect

All the certifications are focused on a single aspect of Finance. The credit certifications are narrow and do not allow the candidate to switch to another department or field of Finance. 

For example, a candidate who has obtained the Credit Risk Certification CRC can not switch to Equity Research or Investment Banking. 

This is because the certifications are narrow. They are less wide than other finance certifications like the Charter of Financial Analyst CFA program, which is wide and broad. 

4. Notoriety and robustness of the certification

Nothing passes the Charter of Financial Analyst CFA program regarding notoriety in the field of finance certifications. Another unique program is the Financial Risk Management certification.

However, the CBA, CCE, and other credit analyst programs are small in comparison to the notoriety and robustness of the paper. So it is not even though the CFA designation is the most robust professional certification in the finance industry. 

Free Resources

To continue learning and advancing your career, check out these additional helpful WSO resources:

• Credit
• Creditworthiness
• Credit Analysis
• Credit Analysis Basics
• Credit Analysis Report