Question

which of the following is something a lender will not consider when reviewing your loan application?
a. collateral
b. family size
c. credit score
d. debt-to-income (dti) ratio

Explanation:

Analyze the factors in loan evaluation

Using the Lending Criteria knowledge point, lenders evaluate specific financial metrics to assess a borrower's ability and willingness to repay a loan. These standard factors help determine the level of risk associated with lending money.

Evaluate collateral as a factor

Using the Collateral Benefits knowledge point, collateral is an asset (like a house or car) that secures a loan. Lenders consider collateral because it provides a backup source of repayment if the borrower defaults.

Evaluate credit score as a factor

Using the Credit Score Requirements knowledge point, a credit score represents a borrower's creditworthiness based on their credit history. Lenders heavily rely on this score to evaluate the likelihood of timely repayment.

Evaluate debt-to-income ratio as a factor

Using the Debt-to-Income Ratio knowledge point, the DTI ratio compares a borrower's monthly debt payments to their monthly gross income. Lenders use this to ensure the borrower is not overleveraged and has sufficient income to cover new payments.

Identify the non-financial factor

Family size is a personal demographic characteristic rather than a direct financial metric. Under fair lending laws, lenders evaluate creditworthiness based on financial capacity and history, not personal household demographics. Therefore, family size is not considered.

Answer:

• a. collateral
• b. family size (Correct answer)
• c. credit score
• d. debt-to-income (DTI) ratio