Question

Alan and Samuel each have a 30-year mortgage. Both mortgages were approved at the same time. Alan pays 5 percent interest, while Samuel only pays 3.5 percent.

If Alan and Samuel are the same age and make the same amount of money, why is Alan paying more in interest?


a) Samuel has a better credit score, so his interest rate is lower.

b) Samuel has more credit cards, so he recieves a better rate.

c) Alan has a better credit score, so his interest rate is higher.

d) Alan has a longer credit history, so he recieves a worse rate.

Answer 1

The answer would be c

Answer 2

a) Samuel has a better credit score, so his interest rate is lower.

Explanation:

Alan and Samuel both are same age and make same amount of money.

They both have a 30-year mortgage. But Alan pays 5 percent interest, while Samuel only pays 3.5 percent.

There correct answer here will be - Samuel has a better credit score, so his interest rate is lower.

When a person has a good credit rating, that means he has never defaulted any payment and has always paid his loan on time. He must be a trusted customer for the bank that is why he got a lower interest rate than Alan.