What action should be taken if an applicant has a credit score below the lender’s minimum requirement?

When an applicant presents a credit score that falls below the lender’s minimum requirement, the most appropriate action is to consider the application for denial or to require additional compensating factors to enhance the applicant's profile. This means the lender is examining whether aspects of the applicant's financial situation might offset the low credit score.

Compensating factors can include things such as a higher down payment, a lower debt-to-income ratio, or significant cash reserves. The idea is that even though the credit score is inadequate, these positive attributes can mitigate the risk for the lender, making it possible for the loan to be considered despite the low score.

While other options suggest immediate approval under certain conditions or increased loan costs, they don't directly address the standard procedure when encountering low credit scores. Requesting a free credit report does not directly relate to how the lender handles the application itself, limiting its relevance in this context.