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?
Correct Answer
B) Consider alternative credit sources and non-traditional credit references
For borrowers with thin credit files, MLOs should consider alternative credit sources such as rental payment history, utility payments, insurance payments, and other non-traditional credit references. Many loan programs allow for manual underwriting using these alternative sources to establish creditworthiness when traditional credit history is limited.
Why This Is the Correct Answer
For borrowers with thin credit files, MLOs should consider alternative credit sources such as rental payment history, utility payments, insurance payments, and other non-traditional credit references. Many loan programs allow for manual underwriting using these alternative sources to establish creditworthiness when traditional credit history is limited.
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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?
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An MLO receives an appraisal that values a property at $50,000 below the contract price. The borrower asks the MLO to request a reconsideration of value. The MLO should: