Which best explains what a credit score represents? B) A numerical rating that expresses how likely you are to repay your debts.
Since your credit score lets banks and lenders know how likely you are to repay your debts, you are letting the lendors see your creditworthiness. When you receive your credit score, your score is based on how much your debt to income ration is, how many lines of credit you have, and how likely you are to pay the debt off.
The correct option is (B). A numerical rating that expresses how likely you are to repay your debts is a credit score.
Further Explanation:
Credit score:
A credit score represents the creditworthiness of an individual based on their financial transaction history. If a person has a sound and on-time payment records, then he would have a high credit score and vice versa.
A low credit score means that a person is not paying their bills and dues on time. The credit score is used by the lenders to assess the capability of the borrower to repay the debt. Generally, lenders do not prefer to lend money to the person with a low credit score.
Justification for the correct and incorrect option:
A.
A number showing how likely you are to have more than one credit card:This is an incorrect option.
A credit score does not help in issuing another credit card.
B.
A numerical rating that expresses how likely you are to repay your debts: This is the correct option.
It shows the ability of an individual to make the debt payment.
C.
A numerical rating that shows how much money you have in your bank account:This is anincorrect option.
There is no relation between the credit rating and bank account balance.
D.
A number expressing your yearly income:This is an incorrect option.
The credit score is a ratio of your ability to pay the debt. It does not disclose the income of a person.
Learn more:
1. Learn more about the money you own to credit card company
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2. Learn more about the common credit card fee
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3. Learn more about the on-time payment of credit card balance
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Answer details:
Grade: Senior School
Subject: Accounting
Chapter: Money & Banking
Keywords:explains, credit score represents, number, showing, likely, have, more, one, credit card, numerical, rating, expresses, repay, debts, rating, money, bank account, expressing, yearly income.
