Question

Under the Consumer Finance Protection Bureau's ability-to-repay rule, what information must lenders consider before deciding how much to loan an individual?

a) Credit score only
b) Employment history only
c) Credit score, income, debt, and assets
d) Collateral value only

Answer 1

Under the Consumer Finance Protection Bureau's ability-to-repay rule, lenders consider the borrower's credit score, income, debt, and assets before deciding how much to loan. These factors help assess the borrower's creditworthiness and ability to repay the loan.

Step-by-step explanation:

Under the Consumer Finance Protection Bureau's ability-to-repay rule, lenders must consider several factors before deciding how much to loan an individual. These factors include:

• Credit score: Lenders assess the borrower's credit history and creditworthiness by checking their credit score. A higher credit score indicates a lower risk for the lender.
• Income: Lenders evaluate the borrower's income to determine their ability to make loan payments. A stable and sufficient income is important for loan approval.
• Debt: Lenders analyze the borrower's existing debt obligations to assess their debt-to-income ratio. A higher ratio may indicate a higher risk for loan repayment.
• Assets: Lenders consider the borrower's assets, such as savings, investments, or property, which can serve as collateral or additional security for the loan.