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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 homeowner with a credit score of 725 is planning a home improvement project and needs to borrow [tex]$\$[/tex]3,500.00[tex]$ with a simple interest rate loan. Determine the interest rate the homeowner will qualify for if they raise their credit score 40 points.

A. $[/tex]4.295\%[tex]$

B. $[/tex]5.597\%[tex]$

C. $[/tex]8.132\%[tex]$

D. $[/tex]9.358\%$



Answer :

GinnyAnswer
Let's consider the information provided:

1. The homeowner has an initial FICO score of 725.
2. The homeowner plans to raise their FICO score by 40 points.

Step-by-Step Solution:

1. Initial FICO score: [tex]\(725\)[/tex]

2. Increase in FICO score: [tex]\(40\)[/tex] points

3. New FICO score:
[tex]\[ 725 (initial \text{ score}) + 40 (\text{increase}) = 765 \][/tex]

4. Determine the applicable interest rate for a FICO score of 765:
According to the interest rates based on FICO score ranges:
- [tex]\(800-850\)[/tex]: [tex]\(4.295\% \)[/tex]
- [tex]\(740-799\)[/tex]: [tex]\(5.597\% \)[/tex]
- [tex]\(670-739\)[/tex]: [tex]\(8.132\% \)[/tex]
- [tex]\(580-669\)[/tex]: [tex]\(9.358\% \)[/tex]
- [tex]\(300-579\)[/tex]: [tex]\(12.413\% \)[/tex]

5. A FICO score of 765 falls within the range [tex]\(740-799\)[/tex].

Therefore, the interest rate the homeowner will qualify for after raising their credit score to 765 is [tex]\(5.597\%\)[/tex].

So, the correct answer is:

[tex]\[ 5.597\% \][/tex]

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