Question

Why do some lenders require borrowers to secure credit?

Answer 1

To reduce risk, D is your answer.

Answer 2

The correct answer is D) To reduce risk.

When lending money to borrowers, financial institutions often require that people secure credit. One of the reasons why this is the case is to reduce the risk.

If a borrower is able to secure credit, it usually means that they are financial responsible as determined by a third party. This usually includes an examination of the credit history. A credit history indicates how many accounts a person possesses, whether or not they have a good history of paying bills on time, and whether or not they use a significant percentage of their secured credit. All these factors play a significant role in securing credit.