What can negatively impact a borrower's ability to get credit?

What can negatively impact a borrower's ability to get credit?

• A. Having a large down payment
• B. Weak credit history
• C. High income
• D. Stability in employment

Answer: (B)

A weak credit history can significantly impact a borrower's ability to secure credit because lenders use credit history as a primary factor in assessing an individual's creditworthiness. A weak credit history may include a pattern of late payments, defaults, or even bankruptcies, which signal to lenders that the borrower may not manage debt responsibly. Consequently, this can lead to higher interest rates or even denial of credit altogether, as lenders perceive a higher risk in extending loans to borrowers with a poor credit history. On the other hand, having a large down payment is typically viewed positively by lenders, as it reduces their risk. A high income can also enhance creditworthiness because it suggests that the borrower will be able to handle repayment. Additionally, stability in employment indicates a reliable source of income, further reassuring lenders about the borrower's ability to meet loan obligations.

A weak credit history can significantly impact a borrower's ability to secure credit because lenders use credit history as a primary factor in assessing an individual's creditworthiness. A weak credit history may include a pattern of late payments, defaults, or even bankruptcies, which signal to lenders that the borrower may not manage debt responsibly. Consequently, this can lead to higher interest rates or even denial of credit altogether, as lenders perceive a higher risk in extending loans to borrowers with a poor credit history.

On the other hand, having a large down payment is typically viewed positively by lenders, as it reduces their risk. A high income can also enhance creditworthiness because it suggests that the borrower will be able to handle repayment. Additionally, stability in employment indicates a reliable source of income, further reassuring lenders about the borrower's ability to meet loan obligations.