Question

Andy has a credit rating of 800, and Mia has a credit rating of 585. They both apply for the same loan amount from Newton Bank. The bank
approves Andy's loan at 6.5%, and Mia is charged 4 percentage points more because of her lower credit rating. What interest rate does Mia have
to pay?
Siku
O A
2.5%
B.
4.0%
O
C.
6.9%
OD. 10.5%
O
O E.
11.25%​

Answer 1

Answer:

D) 10.5

Explanation:

4 points more means

6.5 + 4

= 10.5%

Answer 2

If Andy gets a loan at 6.5% owing to a good credit score and Mia has to pay 4 percentage points more than that of Andy, Mia will have to pay an interest of 10.5% over her loan due to a lower credit score. Therefore, the option D holds true.

What is the significance of credit score?

A credit score can be referred to or considered as a score that determines the credibility of an individual in the market. A credit score has a maximum cap of 900, and anything above 750 is considered as a good credit score.

In the given condition, Mia has a poor credit score of 585, and as a result, she has to pay 4 percentage points more than interest on her loan than Andy's. Thus, if Andy gets a loan at 6.5%, then Mia will get the same loan at 6.5 + 4 = 10.5%.

Therefore, the option D holds true regarding a credit score.

Learn more about a credit score here:

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