A business regularly extends credit to customers for large purchases with a standard interest rate of 5 percent. There is also a $200 installment fee that is added to the total cost of the purchase. A customer applies for credit but has a very low credit score. If the business decides to extend credit, which is most likely?
It is most likely that the business will approve the credit application, but may adjust the interest rate to account for the customer's low credit score. The business may also require a larger down payment or impose stricter repayment terms in order to mitigate the higher risk associated with lending to someone with a low credit score.
