Topic 11 - Checking the Applicant's Credit Status

Question 1

Which information is not revealed by references and statements?

Answer 1

• Pending court hearings
• Purely cash transactions
• Action for maintenance/child support claims
• Borrowings yet to be drawn down

Question 2

A credit record shows records of defaults for how long?

Answer 2

Six years from the date of the default notice, even if arrears are paid off.

Question 3

What issues can render a guarantee invalid?

Answer 3

• Lack of capacity to contract
• Undue influence
• Misrepresentation
• Misapprehension
• Mistake

Duress

Question 4

Payday loans may affect a lender’s attitude towards agreeing to a mortgage. True or False?

Answer 4

True. But they will not always show up in credit searches.

Question 5

Insolvency:

Answer 5

When a person’s liabilities exceed their assets, or they cannot meet their financial obligations when they fall due.

Question 6

CCJs:

Answer 6

Listed on the Register of Judgements, Orders and Fines for England and Wales. They stay on the register for 6 years, unless they are paid in full within a month of the judgement.

Question 7

DROs:

Answer 7

Debt relief orders are intended to help those living in England and Wales who are struggling to pay their debts and who:

• Owe a maximum of £20,000;
• Have total gross assets not exceeding £1,000 plus a car worth less than £1,000;
• Have disposable monthly income of no more than £50

They are unlikely to be in a position to take out a mortgage

Question 8

Acceptable forms of identification:

Answer 8

• Current passport
• Driving license with photo
• Entry on electoral roll
• Recent utility bill or council tax bill in the customer’s name
• A letter or statement from a person of responsibility may be accepted for those who are financially excluded.

Question 9

Record-keeping for money-laundering prevention:

Answer 9

Evidence of identification and of transactions must be retained for at least 5 years.

Question 10

Form J restriction

Answer 10

Filed by a trustee in bankruptcy. It requires the Land Registry to note the trustee’s interest in the property and notify them of any dealings related to it.