Question

When buying a home, the interest rate given on a loan typically depends on the applicant's

credit score. The Fair Isaac Corporation (FICO) is a major producer of credit scores. The
following table contains 10 randomly selected loan applicants along with their FICO scores and the interest rates that
they were given when financing their homes.
1
2
3
4
5
6
7
8
9
FICO Score Interest Rate
756
679
527
839
677
686
512
590
765
6.32
7.85
10.2
5-52
7-3
7-37
9.67
8.4
5.82

Answer 1

When buying a home, the interest rate given on a loan typically depends on the applicant’s credit score. The Fair Isaac Corporation (FICO) is a major producer of credit scores. The following table contains 10 randomly selected loan applicants along with their FICO scores and the interest rates that they were given when financing their homes.

FICO Score

Interest Rate

1

756

6.32

2

679

7.85

3

527

10.2

4

839

5.52

5

677

7.3

6

686

7.37

7

512

9.67

8

590

8.4

9

765

5.82

10

502

10.01

The linear correlation coefficient between FICO score and home loan interest rate is:

– 0.0144

0.9642

– 0.9819

0.1723