26 questions from the Mortgage loan originator (SAFE) practice test.
10 questions, graded as you go, with the reason for every answer. No sign-up.
A lender pulls a tri-merge credit report showing scores of 688, 702 and 715 for a single borrower. Which score is normally used to qualify the borrower?
B. 702
When three scores are available the middle one is used as the borrower's representative score. With only two scores, the lower one is used. Lenders do not average scores.
Reference: Fannie Mae Selling Guide, B3-5.1
Two borrowers apply together. Borrower A's credit score (the middle of three) is 742 and Borrower B's is 668. Under Fannie Mae's guidelines, which figure is the representative credit score for the loan?
D. 668, the lower of the two borrowers' scores
Each borrower's own score is found first, and the lowest of those is the representative credit score for the loan. Income does not determine whose score counts. The average is tempting because Fannie Mae's automated underwriting averages the borrowers' scores when testing the minimum score, but that average is not the representative score.
Reference: Fannie Mae Selling Guide, B3-5.1-02
Which factor carries the most weight in a typical FICO credit score?
A. Payment history
Payment history is the largest component, about 35% of the score, followed by amounts owed at about 30%. Inquiries get a lot of attention from borrowers but new credit is only about 10%.
Reference: FICO score factors