ECONOMICS
CREDIT
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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The higher the credit score, the lower the interest rate
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The lower the credit score the lower the interest rate
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There is no correlation between credit score and interest rate
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None of the above
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Detailed explanation-1: -The interest rate you’re charged is typically based on your credit score, which measures the level of risk you represent to a lender in paying back what you owe. The higher your credit score, the more likely a lender will offer you a lower interest rate, and vice versa.
Detailed explanation-2: -A higher score increases a lender’s confidence that you will make payments on time and may help you qualify for lower mortgage interest rates and fees.
Detailed explanation-3: -Approximately 35% of the score is based on payment history. Approximately 30% of the score is based on outstanding debt. A good guide is to keep your credit card balances at 25% or less of their credit limits. Approximately 15% of the score is based on the length of time credit has existed.
Detailed explanation-4: -“Your credit score is one factor that can affect your interest rate, ” according to the CFPB. “In general, consumers with higher credit scores receive lower interest rates than consumers with lower credit scores.”
Detailed explanation-5: -Interest rates are determined by your credit score and history-the higher your credit score, the lower your interest rate. Fees: Additional costs of taking out a loan, such as origination fees, late fees, insufficient funds fees and more.