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Definition: Credit Risk Certification
Credit Risk Certification is a certification related to commercial or consumer credit review or the loan review that needs to be done by the financial institutions before lending to its prospective customers. The professionals who complete this certification have better prospects in risk management profile offered by various companies or financial institutions. It also helps them to enhance their reputation in professional life, pay scales and also helps them to establish themselves as a leader in this field of credit risk management in financial services sector.
The exam to obtain this certification is conducted by Risk Management Association (RMA). This exam is of five hours and it consists of 126 questions. However, after completion of this certification, the professionals need to complete the 45 hour study or training material once in every three years in order to carry forward their tag of CRC certification. CRC is an indicator that the holder has the knowledge and the expertise to handle any kind of situation related to credit risk.
However in order to use CRC designation, professionals need to fulfill the following criteria:
• Minimum five years of full time experience is required in the field of either risk management related to credit or lending review but in any case in should not be restricted only to the area of examiner of any regulatory institution
• Must complete CRC examination successfully
• Must fulfill all the requirements for continuing education
The syllabus of CRC mainly covers the seven areas related to or requires for credit risk management:
• Evaluation of the market, positioning of industry in the market as well as its competitors
• Formulation and execution of strategies related to business as well as financials of the company
• Accurate assessment of the credibility and correctness of the balance sheet provided by the company
• Accurate assessment of the cash flow of the company in order to judge its ability for repayment of the debt that it already has or wishes to take in the near future
• Structuring of loan as well as proper documentation
• Recognizing the problems associated with different kinds of loans and formulation of corrective actions for the same
RMA-CRC also helps the industry to evolve a one common credit culture for the entire financial services industry. Pearson VUE is the service provider for conducting such kind of RMA-CRC testing programs.