Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. accounting
  3. lenders primarily use the fair isaac corporation (

Lenders primarily use the Fair Isaac Corporation (FICO) model to determine credit scores. FICO grades...

70.2K

Verified Solution

Question

Accounting

Lenders primarily use the Fair Isaac Corporation (FICO) model to determine credit scores. FICO grades consumers on a 300- to 850-point range; a higher score indicates less risk to the

lender. A score of 800 or higher is considered exceptional; 740 to 799 is very good; 670 to 739 is good; 580 to 669 is fair; and 579 or lower is poor.

According to MyFICO.com your credit score can impact interest rates available to you as follows:

FICO score

APR

760850

4.17%

700759

4.392%

680699

4.569%

660679

4.783%

640659

5.213%

620639

5.759%

  1. Using the loan rate available to someone with a FICO credit score of 780, calculate the monthly payment and total paid over the life of a $250,000 30-year fixed-rate mortgage for someone with this credit score.

  1. Now, calculate the monthly payment and total paid using the loan rate available to someone with a FICO credit score of 630.

  1. Calculate the difference in monthly payment and the total interest paid for someone with a very good credit rating (780) with someone who has a low credit rating (630).

Answer & Explanation Solved by verified expert
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students