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

\begin{tabular}{|c|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]$\$[/tex]3,500[tex]$ with a simple interest rate loan. Determine the interest rate the consumer will qualify for if their credit score decreases by 80 points.

A. $[/tex]8.132\%[tex]$
B. $[/tex]5.597\%[tex]$
C. $[/tex]12.413\%[tex]$
D. $[/tex]9.358\%$



Answer :

GinnyAnswer
To determine the interest rate the consumer will qualify for if their credit score decreases by 80 points, let's go through the steps step-by-step:

1. Initial Credit Score: The consumer initially has a credit score of 825.

2. Decrease in Credit Score: The credit score decreases by 80 points.

3. Calculate the New Credit Score:
[tex]\[ \text{New Credit Score} = \text{Initial Credit Score} - \text{Decrease} \][/tex]
[tex]\[ \text{New Credit Score} = 825 - 80 = 745 \][/tex]

4. Determine the Interest Rate Based on the New Credit Score:
- According to the FICO score table provided:
- A score of 800-850 qualifies for a 4.295% interest rate.
- A score of 740-799 qualifies for a 5.597% interest rate.
- A score of 670-739 qualifies for an 8.132% interest rate.
- A score of 580-669 qualifies for a 9.358% interest rate.
- A score of 300-579 qualifies for a 12.413% interest rate.

5. Identify the Range for the New Credit Score (745):
- The new credit score of 745 falls in the range of 740-799.

6. Interest Rate Qualification:
- Therefore, with a score of 745, the consumer will qualify for an interest rate of 5.597%.

So, the answer is:
[tex]\[ \boxed{5.597\%} \][/tex]

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