Final answer:
Fannie Mae labels a credit score between 620 and 680 as a subprime mortgage. This type of loan is offered at higher interest rates to account for the increased risk. Credit decisions are made fairly, based on financial facts, allowing for change over time.
Step-by-step explanation:
Fannie Mae considers a credit score between 620 and 680 to be a subprime mortgage. This category represents a loan that is offered to borrowers with lower credit ratings. Subprime loans come with interest rates that are higher, often adjustable, than those for conventional mortgages. This is to compensate the lender for the increased risk of default they incur by lending to individuals with lower credit scores. When analyzing the data for such credit decisions, it's important to consider measures of the centre, like the mean, median, and mode — which are ways to summarize and understand various data sets.
For example, if the mode of workers' annual earnings at a factory occurs most frequently at a certain amount, that figure gives an indication of the common earnings level, despite what the mean (average) or median (middle value in an ordered list) might suggest.Credit decisions are a fair way for lenders to evaluate potential borrowers. Decisions are made based on past and present financial behaviors, not on discriminatory factors like race, gender, or religion. Additionally, while credit mistakes can affect one's credit score, the impact is not permanent, allowing for recovery over time.