Question

what might you expect to find out about people who are described as credit risks?
they are usually given a low interest rate.
they have a history of not making their payments on time.
they find it easy to get a loan from the bank.
they have a history of paying in full each month.

Explanation:

To determine the correct answer, we analyze the concept of "credit risks." A credit risk refers to a person who is likely to default on their financial obligations.

• Option 1: People with credit risks are usually given a high interest rate, not low, to compensate for the risk. So this is incorrect.
• Option 2: A history of not making payments on time indicates that the person is a credit risk, as they are less likely to fulfill their financial commitments. This matches the definition.
• Option 3: People with credit risks find it hard to get a loan, as banks are reluctant to lend to those with a high risk of default. So this is incorrect.
• Option 4: A history of paying in full each month shows good credit behavior, not credit risk. So this is incorrect.

Answer:

B. They have a history of not making their payments on time.