A licensing coordinator is resolving Credit Reports and Scoring during an internal audit sample. Which action best fits the rule?
Correct Answer
B) Update the analysis when credit facts change
Why this is correct: Credit analysis must be based on the most current, accurate information available to properly assess the borrower's ability to repay. If facts change—such as a new account being opened, a balance being paid down, or a dispute being resolved—the analysis must be updated to reflect the new credit profile. The correct answer, "Update the analysis when credit facts change," aligns with this requirement for accurate and timely evaluation. Why the other choices are wrong: "Treat disputed accounts as irrelevant without following program or investor requirements" is wrong because disputed accounts must be evaluated according to specific guidelines; they cannot be automatically dismissed. "Ignore a recent inquiry because the borrower says no new account was opened" is wrong because recent inquiries require review to understand potential new debt, regardless of the borrower's statement. "Calculate DTI before resolving known obligations shown outside the credit report" is wrong because known debts (like child support or separate loans) must be included in the DTI calculation; calculating DTI before adding them would produce an inaccurate ratio. Exam tip: The credit file is a snapshot in time. Any new, material information requires you to update your analysis.
Why This Is the Correct Answer
The correct response is "Update the analysis when credit facts change" because Credit evaluation uses verified credit, debts, history, and repayment ability.
Why the Other Options Are Wrong
Option A: Treat disputed accounts as irrelevant without following program or investor requirements.
This choice is a tempting shortcut, but it conflicts with credit evaluation because the file still needs the required documentation, timing, or rule-based review before the action is taken.
Option C: Ignore a recent inquiry because the borrower says no new account was opened.
This choice is a tempting shortcut, but it conflicts with credit evaluation because the file still needs the required documentation, timing, or rule-based review before the action is taken.
Option D: Calculate DTI before resolving known obligations shown outside the credit report.
This choice is not the best answer because it applies the wrong file step for credit evaluation; the governing rule is tested by the correct option.
Memory Technique
credit evaluation: identify the rule being tested, then choose the action that documents or applies that rule before the file moves forward.
Exam Tip
For credit evaluation questions, separate the required file step from plausible sales, timing, or documentation shortcuts.
Common Mistakes to Avoid
- -Choosing an internal exception instead of the governing rule
- -Treating preliminary or informal facts as a substitute for required documentation
- -Answering from a familiar but unrelated mortgage topic
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