A borrower has a credit score of 740 but has three recent inquiries from auto dealerships within a 14-day period. How should these inquiries be treated for mortgage qualification purposes?
Correct Answer
B) All three inquiries are treated as a single inquiry for scoring purposes
Under FICO scoring methodology, multiple inquiries of the same type (auto, mortgage, student loan) within a 14-45 day window are treated as a single inquiry to allow rate shopping without penalty. This protects consumers who shop for the best rates.
Why This Is the Correct Answer
Under FICO scoring methodology, multiple inquiries of the same type (auto, mortgage, student loan) within a 14-45 day window are treated as a single inquiry to allow rate shopping without penalty. This protects consumers who shop for the best rates.
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A borrower receives pre-approval for a conventional loan but decides to apply for an FHA loan instead. The MLO discovers the borrower has a bankruptcy from 18 months ago that meets FHA guidelines but not conventional guidelines. What should the MLO do?
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An MLO is reviewing a credit report that shows a borrower with thin credit - only two tradelines, both opened within the last 12 months. What is the best approach to evaluate this borrower's creditworthiness?