Question

3 Select the correct answer. Tracy applied for a home loan from her bank. The bank is willing to give her the loan but at a very high interest rate. Why do you think the bank is charging her a high interest rate? A low amount of credit left B. good payment history OC. bad payment history OD. high number of bank accounts​

Answer 1

C. bad payment history

Step-by-step explanation:

Creditworthiness is the term banks, and other lenders use to determine the risk associated with each customer. Credit score ratings place customers into different risk categories. A low credit score signifies a high-risk customer or low creditworthiness. Banks will extend credit facilities to a high-risk customer at a high-interest rate.

A customer with a poor loan repayment history has a low credit score. Tracy is being offered the loan at a high-interest rate due to her low creditworthiness. Her case would be different if she had a better credit score associated with a good loan repayment history.