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Review the simple interest rate based on FICO scores to answer the question:

\begin{tabular}{|l|l|}
\hline
FICO Score & Simple Interest Rate \\
\hline
[tex]$800 - 850$[/tex] & [tex]$4.295\%$[/tex] \\
\hline
[tex]$740 - 799$[/tex] & [tex]$5.597\%$[/tex] \\
\hline
[tex]$670 - 739$[/tex] & [tex]$8.132\%$[/tex] \\
\hline
[tex]$580 - 669$[/tex] & [tex]$9.358\%$[/tex] \\
\hline
[tex]$300 - 579$[/tex] & [tex]$12.413\%$[/tex] \\
\hline
\end{tabular}

A consumer with a credit score of 825 is planning to buy a used car and needs to borrow [tex]$\$[/tex]3,500$ with a simple interest rate loan. Determine the interest rate the consumer will qualify for if their credit score decreases by 80 points.



Answer :

GinnyAnswer
Let's solve this question step-by-step:

1. Identify the initial conditions:
- The initial credit score of the consumer is 825.

2. Determine the change in the FICO score:
- The FICO score decreases by 80 points.

3. Calculate the new FICO score:
- New FICO score = Initial FICO score - Decrease in FICO score
- New FICO score = 825 - 80
- New FICO score = 745

4. Determine the interest rate for the new FICO score:
- We need to find the applicable interest rate for a FICO score of 745.
- According to the given interest rate table:
- FICO score range: 740-799 corresponds to a simple interest rate of 5.597%.

5. Conclusion:
- With the new FICO score of 745, the consumer qualifies for a simple interest rate of 5.597%.

So, the interest rate the consumer will qualify for, after their credit score decreases by 80 points, is 5.597%.

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