Explain the effect of credit history on the terms of a loan.(1 point)
Responses
A negative credit history will mean a lower interest rate.
A negative credit history will mean a lower interest rate.
A positive credit history will mean a lower interest rate.
A positive credit history will mean a lower interest rate.
A positive credit history will mean a higher interest rate.
A positive credit history will mean a higher interest rate.
More information is needed.
The correct response is: A positive credit history will mean a lower interest rate.
Having a positive credit history indicates to lenders that you are a responsible borrower and are more likely to repay the loan on time. As a result, lenders are more willing to offer you lower interest rates, as there is less risk involved in lending to you. On the other hand, a negative credit history suggests that you may be a higher risk borrower, resulting in higher interest rates or even being denied a loan altogether.