Question

Mike has a credit rating of 720. Tyler has a credit rating of 560. Mike and Tyler apply for identical loans from Park Bank. Mike is approved for a loan at 3.2% interest, and Tyler is approved for a loan that charged 3 percentage points higher because of his inferior credit rating. What interest rate is Tyler charged?

Answer 1

Answer: 45

Step-by-step explanation:

Answer 2

Answer:

6.2%

Step-by-step explanation:

Credit rating is an evaluation of the credit risk of a borrower, that how often a person is going to repay their debt, by credit rating it predicts the ability of the debtor to payback.

Mike has credit rating = 720

Tyler has credit rating = 560

Both are approved for loan. Mike's Credit score is higher, which means he is a much safer debtor as compared to Tyler. Mike will be able to pay back much easily than Tyler. Therefore Mike interest rate is 3.2%

Interest rate of Tyler is higher as he is not that trusted and has low Credit rating. Tyler is approved for a loan that charged 3 percentage points higher because of his inferior credit rating so it interest on the loan will be

Interest = 3.2%+3% = 6.2%