Question

Refer to Section 1.3.2, Credit Scores, beginning on page 22 of the report. Arrange the five tiers of credit scores in order, starting with the lowest tier of credit scores. Tiles: Subprime, Prime, Deep Subprime, Near-Prime, Superprime.

1. Subprime, Prime, Deep Subprime, Near-Prime, Superprime
2. Superprime, Near-Prime, Deep Subprime, Prime, Subprime
3. Subprime, Deep Subprime, Prime, Near-Prime, Superprime
4. Superprime, Prime, Near-Prime, Deep Subprime, Subprime

Answer 1

The correct order of credit score tiers from lowest to highest is Deep Subprime, Subprime, Near-Prime, Prime, and Superprime. Credit scores influence the interest rates offered on loans such as subprime mortgages.

Step-by-step explanation:

In regards to credit scores and their tiers, the correct order starting with the lowest tier is as follows: Deep Subprime, Subprime, Near-Prime, Prime, and Superprime. These tiers are crucial for lenders to assess the risk associated with lending money to both individuals and businesses.

The subprime mortgage is an example of a loan offered to those with lower credit ratings, typically carrying a higher interest rate to mitigate the lender's risk.

Factors such as previous borrowing history, timely repayment of loans, savings, and other investments are considered when banks determine a borrower's credit rating, which in turn influences the rate at which they can borrow money.

The correct order of the five tiers of credit scores, starting with the lowest tier, is Subprime, Prime, Deep Subprime, Near-Prime, and Superprime.