Chapter 10 — Self-Check Quiz

DataField.Dev

Chapter 10 — Self-Check Quiz

Twenty-six questions. Multiple choice and short answer, in the style of the SAFE MLO test where the material is exam-relevant. Work them without the chapter open, then check the key at the bottom.

1. A tri-merge credit report is produced by:

A. Fannie Mae
B. any one of the three nationwide consumer reporting agencies
C. a credit reporting agency that pulls all three bureaus and merges the results
D. the lender's automated underwriting system

2. Borrower A's scores are 704, 688, and 731. Borrower B returned only two scores: 745 and 739. The representative score for the loan is:

A. 688
B. 704
C. 721
D. 739

3. A single borrower returns scores of 812, 798, and 805. The representative score is:

A. 798
B. 805
C. 812
D. 805 only if all three bureaus report the same accounts

4. Borrower A: 660, 660, 701. Borrower B: 688, 694, 675. The representative score for the loan is:

A. 660
B. 675
C. 688
D. 674

5. Which of the following does a credit score model not consider?

A. the number of accounts carrying balances
B. the borrower's gross monthly income
C. how recently a delinquency occurred
D. the age of the borrower's oldest account

6. Under the Fair Credit Reporting Act, obtaining a consumer report requires:

A. a signed purchase contract
B. a permissible purpose
C. the borrower's presence at the time of the pull
D. approval from the lender's underwriting department

7. The largest component of a commonly published FICO score, by approximate weight, is:

A. amounts owed
B. length of credit history
C. payment history
D. new credit

8. Which score component can most realistically change within a single reporting cycle?

A. length of credit history
B. amounts owed
C. credit mix
D. payment history

9. A revolving account reports a balance of \$1,470 and a credit limit of \$2,100. Its utilization is:

A. 42.86%
B. 70.00%
C. 143.00%
D. cannot be determined without the high credit

10. A borrower has two revolving accounts: \$900 against a \$1,500 limit, and \$3,300 against a \$6,000 limit. Aggregate utilization is:

A. 55.00%
B. 56.00%
C. 57.50%
D. 60.00%

11. An installment tradeline shows a date opened 44 months before the pull, terms of 60 months, a payment of \$389, and a balance of \$5,980. The remaining term is:

A. 15 payments
B. 16 payments
C. 44 payments
D. cannot be determined from a credit report

12. For the tradeline in Question 11, dividing the balance by the payment gives 15.37. This figure is lower than the true remaining term because:

A. the balance is reported net of the final payment
B. part of each payment is interest, so the balance is worth fewer payments than it appears
C. the credit report understates balances by convention
D. the borrower has been paying ahead

13. A charge-off means:

A. the debt has been legally forgiven
B. the creditor has written the balance off its books; the debt remains owed
C. the account has been sold to a collection agency
D. the account will be removed from the report within 12 months

14. Which of the following is a public record as that term is used on a credit report?

A. a collection account
B. a charged-off auto loan
C. a bankruptcy
D. a 120-day late payment

15. Civil judgments and tax liens generally no longer appear on consumer credit reports. For a mortgage loan officer, the practical consequence is that such items are most likely to surface:

A. in the automated underwriting findings
B. in the title search
C. on the borrower's paystub
D. nowhere; they no longer affect residential lending

16. A rapid rescore is best described as:

A. a dispute filed on the borrower's behalf
B. an expedited update of documented tradeline changes, producing a fresh score
C. a guarantee that the score will improve within five business days
D. a service the borrower pays for directly

17. The credit reporting agency's reinvestigation of a consumer dispute must generally be completed within:

A. 10 days
B. 30 days, extendable to 45 in specified circumstances
C. 60 days
D. one billing cycle

18. A tradeline carries a dispute comment during an active loan file. The most likely immediate consequence is:

A. the item is excluded from the debt-to-income calculation
B. the score is recalculated without the item
C. the automated findings flag it and the lender must resolve it before relying on them
D. nothing; disputes have no effect on mortgage underwriting

19. Which of the following is hurtful to a borrower's credit profile in the weeks before closing?

A. paying a credit card balance down before the statement closing date
B. obtaining a credit supplement to report a missing limit
C. closing three long-held, paid-off credit cards
D. bringing a past-due account current

20. A soft pull:

A. does not affect the score and is not shown to other lenders on reports used for credit decisions
B. affects the score by a smaller amount than a hard pull
C. requires no permissible purpose
D. appears on the tri-merge as a hard inquiry after 30 days

21. A borrower with no credit score:

A. cannot be approved for any mortgage financing
B. may be able to qualify using documented non-traditional credit, subject to program rules
C. must be assigned a default score of 620
D. is automatically declined by every automated underwriting system

22. A loan officer may:

A. promise a borrower a specific score increase from paying down balances
B. advise a borrower to dispute an accurate 60-day late payment
C. refer a borrower to a company charging \$99 per month in advance to dispute accurate items
D. explain that reducing revolving balances improves the largest changeable component of the model, without promising a point outcome

23. Short answer. On the Linden Street file, Borrower 1's scores are 742 / 738 / 751 and Borrower 2's are 706 / 712 / 698. State the representative score for the loan and explain in one sentence why the higher-scoring borrower's number does not price the file.

24. Short answer. The Linden Street file has \$4,479.72 of total monthly obligations against \$10,500.00 of qualifying income. Compute the back-end ratio if a \$611.00 furniture financing payment is added. Show the numerator and the result to two decimals.

25. Short answer. A revolving account reports a balance of \$3,850 against a \$4,500 limit. Compute the current utilization, then compute the paydown required to bring the account to 30%.

26. Short answer. Name the three tools in §10.8, and for each, state in one clause what you must have in hand before you can use it.

Answer key

**1. C.** The bureaus do not merge each other's data; a credit reporting agency (a reseller) pulls all three, reconciles duplicate tradelines, formats the result to mortgage standards, and returns three scores per borrower. **2. B — 704.** Step 1: Borrower A sorts to 688 / **704** / 731, so 704. Borrower B returned two scores, so take the **lower**: 739. Step 2: lowest of {704, 739} = **704**. Distractor C (721) is the average of the two — never average. **3. B — 805.** Sort: 798 / **805** / 812. The middle score. Answer D adds a condition that does not exist. **4. A — 660.** Borrower A has two identical scores and one different: use the duplicated score, 660. Borrower B sorts to 675 / **688** / 694, so 688. Lowest of {660, 688} = **660**. Distractor B (675) is the single lowest number printed on the page, which is a step-1 error. Distractor D is the average. **5. B.** The model reads a credit report. There is no income figure on a credit report. This is why score and debt-to-income are independent tests. **6. B.** Permissible purpose — for a mortgage application, a credit transaction initiated by the consumer. Get the authorization and keep it in the file. **7. C.** Payment history, commonly published at roughly 35%. Amounts owed follows at roughly 30%. Treat both as approximate and varying by model version. **8. B.** Amounts owed. It is roughly 30% of the model, and — unlike payment history — it has almost no memory: the model reads the balance currently reported, not a two-year average. **9. B.** \$1,470 ÷ \$2,100 = 70.00%. **10. B — 56.00%.** Balances \$900 + \$3,300 = \$4,200. Limits \$1,500 + \$6,000 = \$7,500. \$4,200 ÷ \$7,500 = 56.00%. (The per-account figures, 60.00% and 55.00%, are both correct and neither is the aggregate — answers A and D are the two individual accounts.) **11. B — 16 payments.** Method A: 60 − 44 = 16. Method B as a check: \$5,980 ÷ \$389 = 15.37, which is lower than 16, as it should be. **12. B.** Part of every payment is interest, so a balance retires in *more* payments than balance ÷ payment suggests. Method B always reads low; it is a sanity check, never the answer. If it ever reads *higher* than method A, the tradeline is internally inconsistent. **13. B.** A charge-off is the original creditor's accounting write-off after prolonged nonpayment. The debt is not forgiven, remains collectible, and remains reportable. **14. C.** Bankruptcies. Collections and charge-offs are tradelines, not public records. **15. B.** The title search. Most civil judgments and tax liens were removed from consumer credit reports beginning in 2017 under a bureau initiative imposing stricter identification and update standards. They still exist, they still attach to property, and they still stop a closing — you just find them in week three instead of on day one. This is why the URLA declarations ask the borrower directly. **16. B.** A rapid rescore expedites the reporting of a *documented* change. It is not a dispute, it guarantees nothing, and standard practice under the bureaus' agreements with resellers is that the consumer is not charged for it. **17. B.** Generally 30 days, extendable to 45 when the consumer supplies additional information during the initial period. An agency may decline a dispute it reasonably determines is frivolous or irrelevant. **18. C.** The dispute flag is a file-stopper, not a file-helper. The lender must resolve it, resolution requires the consumer to withdraw the dispute and the furnisher to update, and that can consume most of a 30-day cycle. Some furnishers will not even supplement an account under active dispute. **19. C.** Closing paid-off cards removes their limits from the utilization denominator — which *raises* aggregate utilization — and eventually removes the accounts' age. A, B, and D all help. **20. A.** A soft pull — the consumer checking their own report, an existing creditor reviewing an account, a prescreened offer — does not affect the score and is not furnished to other lenders for credit decisions. Note that C is wrong: permissible purpose rules still apply. **21. B.** No score is not the same as bad credit. Documented non-traditional credit — rent, utilities, insurance, tuition — can establish willingness to repay, subject to program rules that differ by agency and change. Verify the current guide. **22. D.** You may explain the mechanism and model it honestly. You may never promise a score outcome, never advise disputing accurate information, and never refer a borrower to an advance-fee credit repair operation. **23.** **706.** Borrower 1's middle is 742; Borrower 2's middle is 706; the loan takes the **lower of the two middles**. The loan is a joint obligation and the investor prices the risk of the whole file, so the pricing engine takes the weakest link and has no opinion about which borrower produced it. **24. 48.48%.** Numerator: \$4,479.72 + \$611.00 = \$5,090.72. \$5,090.72 ÷ \$10,500.00 = 0.484830 = **48.48%**, up from 42.66%. **25.** Current utilization: \$3,850 ÷ \$4,500 = **85.56%**. Target balance at 30%: \$4,500 × 0.30 = \$1,350. Paydown required: \$3,850 − \$1,350 = **\$2,500**. **26.** - **Rapid rescore** — documentation from the creditor that a condition has actually changed (paid balance, corrected limit, corrected status). - **Credit supplement** — a specific question the merged report does not answer (current balance, actual payment, payoff, missing limit, rent verification). - **Dispute** — information the *consumer* believes is inaccurate or incomplete. It belongs to the consumer, runs on a statutory clock, and can freeze a file in process.