Which item is commonly added to the traditional three Cs (credit, capacity, collateral) in underwriting?

• A. Taxes
• B. Assets
• C. Employment verification
• D. Debt-to-income ratio

Answer: (B)

The concept being tested is the addition of a fourth factor to evaluate a borrower’s financial strength beyond the core three: assets (often called capital). Assets measure the borrower’s liquid resources and net worth—cash reserves, investments, and other readily available funds—that show they can cover the down payment, closing costs, and provide a cushion if income or expenses change. This helps lenders assess long-term repayment ability and resilience to financial bumps. Taxes aren’t a separate underwriting category, employment verification feeds into capacity but isn’t a standalone fourth C, and debt-to-income ratio is part of capacity rather than an extra C. So the item commonly added is assets.