Risk Analysis Flashcards
7 cards from real CAC practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Risk Analysis flashcards as text
Synthetic identity fraud in auto lending involves what?
Answer: Combining real and fabricated information to create a new identity
Synthetic identities blend genuine data like an SSN with fake names or dates of birth to obtain credit.
A straw purchase occurs when:
Answer: Someone with better credit buys a vehicle for another person who will drive and pay for it
Straw purchases hide the true borrower's risk profile behind a stronger applicant.
What is 'power booking' in auto finance?
Answer: Overstating vehicle equipment or options to inflate collateral value
Power booking inflates the book value so the loan appears to have a safer LTV than it really does.
How is credit risk often assessed for an applicant with a thin credit file?
Answer: Through alternative data such as rent, utility payments and income stability
Alternative data helps evaluate applicants who lack enough traditional tradelines for a reliable score.
Which macroeconomic change most directly increases auto loan default rates?
Answer: Rising unemployment
Job losses reduce borrowers' ability to make payments, driving delinquencies and defaults higher.
GAP coverage mitigates which risk for the lender and borrower?
Answer: The shortfall between the insurance payout and the loan balance after a total loss
GAP covers the deficiency when a totaled vehicle's value is less than what is still owed.
Under the FCRA, a lender using credit reports to offer less favorable terms to some consumers must generally provide what?
Answer: A risk-based pricing notice or credit score disclosure
The FCRA Risk-Based Pricing Rule requires notice when credit report information leads to materially less favorable terms.