Certified Regulatory Compliance Manager (CRCM) — Question 76

Credit scoring systems:

Answer options

• A. Evaluate an applicant's creditworthiness mechanically, based on key attributes of the applicant and aspects of the transaction, and determine, alone or in conjunction with an evaluation of additional information about the applicant, whether an applicant is deemed creditworthy
• B. Are evaluated by regulatory agencies to determine whether they are empirically derived and statistically sound and to examine: The bank's policies on the use of the credit scoring system Training of bank employees on the use of the system The number of high-side and low-side overrides of the system
• C. Both of these
• D. None of these

Correct answer: C

Explanation

The correct answer is C, as both statements A and B accurately describe the functions and evaluations related to credit scoring systems. Option A details how creditworthiness is assessed, while Option B discusses regulatory evaluations, both of which are essential aspects of credit scoring. Therefore, options A and B are not mutually exclusive, making C the correct choice.