Question 9
Domain 2: Mortgage Loan Origination ActivitiesA mortgage applicant has the following credit scores: Experian 695, Equifax 720, TransUnion 710. Which score will the lender use for underwriting?
Correct answer: C
Explanation
For a mortgage loan, lenders use the middle of the three credit scores from Experian, Equifax, and TransUnion. Here, the scores are 695, 720, and 710, so the middle score is 710. That is the score used for underwriting.
Why each option is right or wrong
A. 695 (lowest)
B. 720 (highest)
C. 710 (middle)
Under Fannie Mae and Freddie Mac underwriting standards, the lender must obtain all three bureau scores and use the representative score for the borrower, which is the middle of the three when three scores are available. With scores of 695, 710, and 720, the median score is 710, so that is the figure used in the underwriting decision.
D. 708 (average)