Chapter 4 - Underwriting A File

46 Questions | Total Attempts: 24

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Writing Quizzes & Trivia

Comprehensive Training Manual Chapter 4


Questions and Answers
  • 1. 
    What is generally considered the minimum personal credit score to obtain unsecured lines of credit?
    • A. 

      650

    • B. 

      680

    • C. 

      700

    • D. 

      720

  • 2. 
    What are the odds of default for a borrower with 800 scores or above?
    • A. 

      123 to 1

    • B. 

      597 to 1

    • C. 

      1292 to 1

    • D. 

      1565 to 1

  • 3. 
    Which of the following is not a component of the personal credit score calculation?
    • A. 

      Inquiries

    • B. 

      Income

    • C. 

      Mix of Credit

    • D. 

      Age of File

    • E. 

      Debt Ratio

  • 4. 
    How long do delinquencies stay on credit report?
    • A. 

      7 years

    • B. 

      8 years

    • C. 

      9 years

    • D. 

      10 years

  • 5. 
    How long does a bankruptcy stay on your credit report?
    • A. 

      7 Years

    • B. 

      8 Years

    • C. 

      9 Years

    • D. 

      10 Years

  • 6. 
    How much does payment history/delinquencies factor into the credit score?
    • A. 

      20%

    • B. 

      25%

    • C. 

      30%

    • D. 

      35%

    • E. 

      40%

  • 7. 
    How much does the debt ratio (which includes revolving debt utilization) factor into the credit score?
    • A. 

      20%

    • B. 

      25%

    • C. 

      30%

    • D. 

      35%

    • E. 

      40%

  • 8. 
    What level of credit card utilization (revolving debt ratio) starts to adversely hurt the credit score?
    • A. 

      10%

    • B. 

      30%

    • C. 

      50%

    • D. 

      70%+

  • 9. 
    What does the code “A” mean next to a credit card account?
    • A. 

      Paid as “agreed”

    • B. 

      Highly rated payment history (as in an “A” grade)

    • C. 

      Authorized User

    • D. 

      Account in Arbitration

  • 10. 
    What does the code “J” stand for next to a credit account
    • A. 

      Joint account

    • B. 

      Judgment (meaning “in judgment”)

    • C. 

      Journeyman

    • D. 

      Pre-judgment

  • 11. 
    The following are strategies to try and lower revolving debt ratios except:
    • A. 

      Ask for credit increases

    • B. 

      Ask credit grantor to term out balance, and report as installment debt

    • C. 

      Use unused cards at least every 6 months

    • D. 

      Transfer balances from cards over 50% utilization to those cards less than 50%

    • E. 

      None of the above (in other words, all are valid strategies)

  • 12. 
    What is considered adequately “deep” credit history?
    • A. 

      3-5 years of history

    • B. 

      5-7 years

    • C. 

      7-9 years

    • D. 

      10+

  • 13. 
    How much does the “age” of your file factor in to the overall credit score?
    • A. 

      10%

    • B. 

      15%

    • C. 

      20%

    • D. 

      25%

  • 14. 
    How much do the inquiries affect the credit score?
    • A. 

      10%

    • B. 

      15%

    • C. 

      20%

    • D. 

      25%

  • 15. 
    Which one of the following is not one of the three main business credit reporting agencies?
    • A. 

      Dun and Bradstreet

    • B. 

      Transunion

    • C. 

      Equifax

    • D. 

      Experian

  • 16. 
    True or False - A business credit report reports Payment History (if data exists):
    • A. 

      True

    • B. 

      False

  • 17. 
    True or False - A business credit report reports Balance owing (if data exists):
    • A. 

      TRUE

    • B. 

      FALSE

  • 18. 
    True or False - A business credit report reports Payment Amount (if data exists):
    • A. 

      True

    • B. 

      False

  • 19. 
    True or False - A business credit report reports Creditor Type (if data exists):
    • A. 

      True

    • B. 

      False

  • 20. 
    True or False - A business credit report reports Creditor Name (if data exists):
    • A. 

      True

    • B. 

      False

  • 21. 
    True or False - A business credit report reports ownership (if data exists):
    • A. 

      True

    • B. 

      False

  • 22. 
    True or False - A business credit report reports Phone to Biz (if data exists):
    • A. 

      True

    • B. 

      False

  • 23. 
    True or False - A business credit report reports Address (if data exists):
    • A. 

      True

    • B. 

      False

  • 24. 
    True or False - A business credit report reports vendor type (if data exists):
    • A. 

      True

    • B. 

      False

  • 25. 
    True or False - A business credit report reports vendor name (if data exists):
    • A. 

      True

    • B. 

      False

  • 26. 
    True or False - A business credit report reports recommended credit amounts (if data exists):
    • A. 

      True

    • B. 

      False

  • 27. 
    True or False - A business credit report reports credit scores (if data exists):
    • A. 

      True

    • B. 

      False

  • 28. 
    In what order is it advised to establish business credit?
    • A. 

      Establish profile, apply for vendor credit, apply for revolving credit, apply for lines of credit

    • B. 

      Establish profile, apply for revolving credit, apply for vendor credit, apply for business lines of credit

    • C. 

      Establish profile, apply for business line of credit, apply for revolving credit, apply for vendor credit

    • D. 

      Apply for vendor credit, establish profile, apply for revolving credit, apply for unsecured lines of credit

  • 29. 
    All of the following types of financing either require or suggest the submission of a business plan (or executive summary) except:
    • A. 

      Microloans

    • B. 

      SBA 7a Express or Community Express

    • C. 

      Business Credit Cards

    • D. 

      Lines of credit

  • 30. 
    Most lenders will refuse to lend unsecured credit to all of the following types of businesses except:
    • A. 

      A. Real Estate investment

    • B. 

      B. Oil and Gas

    • C. 

      C. Mortgage

    • D. 

      D. Consultants

    • E. 

      E. Mining

  • 31. 
    How do lenders ascertain the type of business?
    • A. 

      SIC codes

    • B. 

      Secretary of State

    • C. 

      Websites

    • D. 

      Listing Services

    • E. 

      All of the above

  • 32. 
    What is a healthy amount of accounts receivable for most businesses who have a business model in which accounts receivable is typical?
    • A. 

      Less than 1 month’s revs

    • B. 

      1-2 months’ revs

    • C. 

      3-4 months’ revs

    • D. 

      5+ months’ revs

  • 33. 
    True of False – Banks require personal guarantees for all small business owners who receive unsecured credit.                           
    • A. 

      True

    • B. 

      False

  • 34. 
    If the business qualifies, a bank will lend at most what % of the company’s revenues as an unsecured line of credit?
    • A. 

      5%

    • B. 

      6%-9%

    • C. 

      10%-15%

    • D. 

      16%-20%

  • 35. 
    What is the best definition of Household income?
    • A. 

      Amount of money business owner takes home as a paycheck

    • B. 

      Amount of money business owner and spouse take home in paychecks

    • C. 

      “A” above AND interest, dividend, distribution, or other income (if applicable

    • D. 

      “B” above AND interest, dividend, distribution, or other income (if applicable)

  • 36. 
    Define a Debt Coverage ratio
    • A. 

      Total Debt divided by monthly income

    • B. 

      Monthly debt divided by monthly income

    • C. 

      Monthly income divided by monthly debt

    • D. 

      Monthly income divided by total debt

  • 37. 
    What is the lowest a business DCR can be and still qualify for most unsecured loans?
    • A. 

      1.25

    • B. 

      1.5

    • C. 

      1.75

    • D. 

      2

  • 38. 
    What is the lowest a household DCR can be and still qualify for unsecured credit (note, this is not always calculated by the bank).
    • A. 

      2

    • B. 

      3

    • C. 

      4

    • D. 

      5

  • 39. 
    Why is the Secretary of State listing important?
    • A. 

      To ensure business is profitable and registered with state

    • B. 

      To ensure business is valid and current with state

    • C. 

      To confirm owners and ownership percentages are as stated on application

    • D. 

      A and B only

    • E. 

      B and C only

  • 40. 
    If an owner has more than what % of ownership, they are usually asked to personally guarantee loan:
    • A. 

      15%

    • B. 

      20%

    • C. 

      25%

    • D. 

      30%

  • 41. 
    If an owner has more than what % of ownership, they are usually asked to personally guarantee loan:
    • A. 

      15%

    • B. 

      20%

    • C. 

      25%

    • D. 

      30%

  • 42. 
    Ideally a business has:
    • A. 

      Separate work and home numbers

    • B. 

      Separate work and cell numbers

    • C. 

      Fax numbers

    • D. 

      All of the above

  • 43. 
    What resources might lenders use to verify address listings?
    • A. 

      Secretary of State

    • B. 

      Phone Directories

    • C. 

      Company websites

    • D. 

      Representative to visit location

    • E. 

      All of the Above

  • 44. 
    What are important aspects of a company website (from a lender’s perspective)? CHOOSE ALL THAT APPLY
    • A. 

      Shows the company exists

    • B. 

      Shows what the company does

    • C. 

      Gives bios on the owners

    • D. 

      Has valid contact information

    • E. 

      Does not contain any problematic information

  • 45. 
    What is the minimum time in business for banks to consider lending traditional (non-SBA) unsecured credit to a business?
    • A. 

      1 - 2 years

    • B. 

      2 - 3 years

    • C. 

      3 – 4 years

    • D. 

      4+ years

  • 46. 
    What are acceptable explanations as to what the funds will be used for? CHOOSE ALL THAT APPLY
    • A. 

      Working capital

    • B. 

      Expansion to be able to get more business

    • C. 

      Debt consolidation

    • D. 

      Pay of other creditors

    • E. 

      Business opportunity