Question

What does a low interest rate indicate?

A poor salary

Increased risk

A higher credit score

Zero loan fees

Answer 1

A higher credit score

Explanation:

Remember, you can only get low interest rate if you have a high credit score.

Answer 2

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Answer:

A higher credit score

Explanation:

Interest rates are generally set based on at least a couple of factors:

• what the market will bear (competition)
• the risk associated with a loan

Folks who have a lower level of disposable income, or who have a history of missed payments or loan defaults are likely to have a lower credit score. Loans offered will likely have a higher interest rate than for someone with a better credit score.

Loan fees may be reduced also when interest rates are reduced.

Based on the above discussion, we see that lower loan fees, higher credit score, and lower interest rates are all positively correlated. One does not necessarily indicate another.

Of the choices offered, we suppose "a higher credit score" is most likely the desired answer.