FICO Scores and Loan Interest Rates

What is a FICO score?

• A measure of your annual income

• A type of loan offered by banks

• A numerical representation of your creditworthiness

• A government-issued identification number

How does a FICO score affect the interest rate on a loan?

• Higher FICO scores generally lead to higher interest rates

• Lower FICO scores generally lead to lower interest rates

• Higher FICO scores generally lead to lower interest rates

• FICO scores do not affect interest rates

Which of the following is a component of interest rate calculations?

• The borrower's age

• The loan amount

• The borrower's favorite color

• The borrower's height

Why is credit history important when determining a FICO score?

• It shows how much money you have in your savings account

• It reflects your past borrowing and repayment behavior

• It indicates your current employment status

• It reveals your educational background

What is the impact of late payments on your FICO score?

• Late payments have no impact on your FICO score

• Late payments can improve your FICO score

• Late payments can lower your FICO score

• Late payments can double your FICO score

Which of the following actions can help improve your credit score?

• Closing all your credit accounts

• Making payments on time

• Increasing your credit card balance

• Ignoring your credit report

If a borrower has a FICO score of 750, what can be inferred about their creditworthiness?

• They have poor creditworthiness

• They have average creditworthiness

• They have good creditworthiness

• They have no creditworthiness

Calculate the monthly interest payment for a loan of $10,000 with an annual interest rate of 6%. Assume simple interest and a 1-year term.

• $50

• $60

• $500

• $600

Which of the following is NOT a factor in determining a FICO score?

• Payment history

• Amounts owed

• Length of credit history

• Number of siblings

What is one way to check your credit history?

• By asking your friends

• By reviewing your credit report

• By checking your bank balance

• By looking at your driver's license