Credit Reports and Scoring Flashcards

A client notices a collection account on their credit report that was paid in full two years ago but still shows as 'unpaid.' What is the best course of action?

Answer: Dispute the inaccuracy with the credit bureau in writing

Under the FCRA, consumers have the right to dispute inaccurate information with credit bureaus, which must investigate within 30 days.

Which FICO score range is generally considered 'good' credit by most lenders?

Answer: 670–739

FICO scores of 670–739 are classified as 'good,' while 740–799 is 'very good' and 800+ is 'exceptional.'

A client's credit report shows a charged-off account. How long can this negative item typically remain on a credit report?

Answer: 7 years from the date of first delinquency

Most negative items, including charge-offs, can remain on a credit report for 7 years from the date of first delinquency leading to the charge-off.

Under the VantageScore 3.0 model, which factor carries the MOST weight in calculating the score?

Answer: Payment history

In VantageScore 3.0, payment history is the most influential factor, classified as 'extremely influential.'

A client applies for a mortgage and the lender pulls all three credit bureau scores. Which score is typically used for underwriting decisions?

Answer: The middle score among the three bureaus

Mortgage lenders typically use the middle score from the three major credit bureaus (Experian, Equifax, TransUnion) for underwriting decisions.

Which type of credit inquiry does NOT affect a consumer's FICO credit score?

Answer: A lender checking credit for a pre-approval offer

Soft inquiries, such as pre-approval checks or account reviews by existing creditors, do not affect credit scores; only hard inquiries do.

A client has a credit card with a $5,000 limit and carries a $4,200 balance. What is their credit utilization ratio on this card?

Answer: 84%

Credit utilization is calculated by dividing the balance ($4,200) by the credit limit ($5,000), which equals 84%.