Credit Risk Management Practice Exam

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What factor is NOT included in evaluating a consumer's creditworthiness?

Asset ownership
Industry performance
Net worth
Salary

The correct answer is: Industry performance

Evaluating a consumer's creditworthiness typically involves assessing various personal financial metrics that directly reflect the individual's ability to repay debt. Factors such as asset ownership, net worth, and salary provide insight into a person's financial resources and stability. Asset ownership indicates the value of possessions that can potentially be liquidated or used as collateral. Net worth is a crucial metric that summarizes the difference between an individual's assets and liabilities, illustrating their overall financial health. Salary reflects the income that ensures a consistent source of funds for loan repayment. In contrast, industry performance is primarily concerned with broader economic conditions and trends affecting sectors as a whole rather than focusing on individual credit profiles. While industry performance can impact a consumer indirectly—such as job security within a sector—it does not provide direct insight into an individual’s creditworthiness. Therefore, this factor is not included in evaluating a consumer's creditworthiness.