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
Under FFIEC uniform retail credit guidance, closed-end retail loans such as auto loans are generally charged off by how many days past due?
Answer: 120 days
FFIEC guidance generally calls for closed-end retail loans to be charged off at 120 days delinquent.
Under the Equal Credit Opportunity Act, which factor may a lender NOT use to deny credit?
Answer: The fact that income comes from public assistance
ECOA prohibits discrimination because all or part of an applicant's income derives from public assistance.
When an auto credit application is denied based on a credit report, what must the lender provide?
Answer: An adverse action notice
ECOA and FCRA require an adverse action notice stating the reasons or the right to obtain them.
Under the CECL accounting standard, how are allowances for credit losses on auto loans measured?
Answer: Lifetime expected losses recognized from origination
CECL requires estimating expected losses over the full contractual life when the loan is booked.
Which collateral profile generally increases loss severity if the borrower defaults?
Answer: An older, high-mileage vehicle that depreciates quickly
Rapidly depreciating collateral yields lower auction proceeds and larger deficiencies.
What is the best practice for handling credit scorecard overrides?
Answer: Document the reason and monitor override performance over time
Documented, tracked overrides let management see whether judgment calls help or hurt performance.
Comparing a credit model's predicted default rates against actual outcomes is known as what?
Answer: Back-testing or model validation
Back-testing checks whether a model's predictions remain accurate so it can be recalibrated if needed.