Chapter 14: Application Analysis - Borrower Credit

Question 1

Define the term trade line.

Answer 1

Information on a debt, found in a credit report, that contains the date that the credit was granted, the balance, terms and repayment history

Question 2

Discuss the items that are involved in calculating a credit score.

Answer 2

Payment History, Amounts Owed, Length of Credit History, New Credit and Inquiries, Types of Credit, and Number of Trades on File are all used to calculate a credit score.

Question 3

What can an individual do to increase his or her credit score?

Answer 3

Ensure that payments are always made on time; limit the number of credit inquiries; maintain balances below 30% of credit limits.

Question 4

If an individual has a judgment filed against him or her, in what section of a credit bureau would this information be found?

Answer 4

Public Records section.

Question 5

f an individual has an account rated as an R3 on his or her credit bureau, what type of credit is this rating referring to and how many months in arrears is this account?

Answer 5

This is a revolving account such as a credit card and it is 2 months in arrears.

Question 6

What is the relationship between a credit score and the delinquency rates of Canadians?

Answer 6

The lower the credit score the higher the delinquency rate.

Question 7

How long does a bankruptcy remain on an individual’s credit report provided by:
a) Equifax
b) Transunion

Answer 7

Equifax? 6 years
b) Transunion? 7 years

Question 8

How long does credit counselling remain on an individual’s credit report provided by:
A) Equifax
B) Transunion

Answer 8

Equifax? 3 years.
b) Transunion? 2 years.

Question 9

If an individual disputes an item in his or her credit report, what can he or she do?

Answer 9

Contact the Credit Bureau to remove the item.

Question 10

Can a Mortgage Agent provide a copy of a client’s credit report to the client?

Answer 10

No, a Borrower must contact the Credit Bureau directly for this report.

Question 11

What is the name of Equifax’s credit score?

Answer 11

Beacon score

Question 12

. What is the name of Trans Union’s credit score?

Answer 12

Empirica score

Question 13

What is the Bank. Nav. Index?

Answer 13

The Bank. Nav. Index, short for the Bankruptcy Navigator Index, is a proprietary scoring model used by Equifax to predict the likelihood of a consumer becoming bankrupt within the next 24 months.

Question 14

What is the likelihood of a person with a 570 Beacon score to be delinquent?

Answer 14

21%

Question 15

How many inquiries will appear in the Member Inquiries section?

Answer 15

However many there have been in the past 36 months