CMP CMP - Certified Mortgage Processor Credit Analysis and Credit Reports Questions and Answers 1 — Questions and Answers
Question 1: Which credit scoring model is most commonly used by mortgage lenders to evaluate borrower creditworthiness?
- VantageScore 3.0
- FICO Score (Correct answer)
- TransUnion CreditVision
- Equifax Risk Score
Correct answer: FICO Score
Mortgage lenders primarily use FICO Scores, which are required by Fannie Mae and Freddie Mac for conventional loan underwriting.
Question 2: When a mortgage processor pulls a tri-merge credit report, which three credit bureaus are included?
- Equifax, TransUnion, and Innovis
- Experian, TransUnion, and Equifax (Correct answer)
- FICO, Experian, and TransUnion
- Equifax, LexisNexis, and Experian
Correct answer: Experian, TransUnion, and Equifax
A tri-merge credit report combines data from Equifax, TransUnion, and Experian — the three major consumer credit bureaus.
Question 3: How is the qualifying credit score determined when there are three scores from a tri-merge credit report for a single borrower?
- The highest score is used
- The average of all three scores is used
- The middle score is used (Correct answer)
- The lowest score is used
Correct answer: The middle score is used
For a single borrower, the middle (median) of the three bureau scores is used as the qualifying credit score.
Question 4: What is the minimum credit score typically required for a conventional conforming loan backed by Fannie Mae?
- 580
- 500
- 620 (Correct answer)
- 660
Correct answer: 620
Fannie Mae generally requires a minimum credit score of 620 for conventional conforming loan eligibility.
Question 5: A mortgage credit report shows a collection account for $150. According to standard guidelines, how should the processor treat this when calculating qualifying ratios?
- It must always be paid off before closing
- It can typically be ignored for conventional loans if it meets the de minimis threshold (Correct answer)
- It must be disputed before closing
- It automatically disqualifies the borrower
Correct answer: It can typically be ignored for conventional loans if it meets the de minimis threshold
Many conventional loan guidelines allow processors to disregard small collection balances that fall below the de minimis threshold without requiring payoff.
Question 6: What does a 'credit supplement' accomplish in the mortgage processing workflow?
- It replaces the original credit report entirely
- It adds an additional hard inquiry to the borrower's credit
- It updates the credit report with recent account activity or corrections (Correct answer)
- It removes all derogatory items from the report
Correct answer: It updates the credit report with recent account activity or corrections
A credit supplement updates an existing credit report to reflect recent changes, corrections, or new tradeline information without pulling an entirely new report.
CMP CMP - Certified Mortgage Processor Credit Analysis and Credit Reports Questions and Answers 1
Which credit scoring model is most commonly used by mortgage lenders to evaluate borrower creditworthiness?