Final answer:
The lending company determines whether to give a loan to a potential borrower based on factors like the borrower's credit rating, income sources, and collateral. The borrower's credit rating is assessed by private companies, while the lending company considers other factors such as savings, investments, and the need for a cosigner.
Step-by-step explanation:
When determining whether to give a loan to a potential borrower, the lending company considers several factors. One important factor is the borrower's credit rating. This rating is determined by private companies, such as Standard and Poor's and Moody's, based on the borrower's previous borrowing history and their ability to repay loans. The lending company also looks at other factors, such as the borrower's income sources, savings, and investments. In some cases, the lending company may require a cosigner or collateral to ensure repayment.