Question

Patrick Guitman recently graduated from college with $20,000 in student loans and $5,000 in credit card debt. He usually makes minimum payments on his debt and he has been late with three payments in the last year. He wants to buy a new car but was told that his interest rate on a loan would be very high. What is the most likely reason this might be so?a. General interest rates are very lowb. His credit rating is poor because of his late paymentsc. He already has a student loan outstandingd. Recent graduates are not allowed to have more than $25,000 in debt outstanding e. Interest rates must be tied to the CPI

Answer 1

Answer:

The answer is: B) His credit rating is poor because of his late payments

Explanation:

To have a good credit rating is extremely important for anyone trying to get a loan. Borrowers with good credit rating usually get lower interest rates and larger amounts. It is very important to pay your debt on time, or else your credit rating will suffer. If a person has a bad credit rating, banks will charge them higher interest rate and loan them smaller amounts of money. If your credit rating is too low, the bank might even reject your loan application.