Question

Oscar received his credit report and sees that his VantageScore is 400. Which factor could be the cause?

a

He filed for bankruptcy 15 years ago.


b

He has five credits cards with high balances.


c

He has a low debt-to-credit ratio.


d

He has applied for his first loan in his life.

Answer 1

He has five credits cards with high balances

Step-by-step explanation:

If Oscar has a credit score of 400, it would make most logical sense that it’s because his history of paying off the purchases on his credit card are nonexistent/ low, explaining how his cards have high balances, meaning that they are not paid. The low credit score is bad for him because it shows other banks that he can’t be trusted to take out a loan because he is not trustworthy to pay it back. Therefore, the answer is B. He has five credit cards with high balances

Answer 2

b. He has five credits cards with high balances.

Step-by-step explanation:

A VantageScore is a credit score model that shows the probability that someone will pay the loans. A 400 VantageScore is very poor and people can get this score for different situations like bankruptcies as they will appear in your report for up to 10 years, having high utilization rates on your credit card and missing payments. According to this, the answer is that the factor that could be the cause is: he has five credits cards with high balances because he would have a high utilization rate which hurts the credit score.

The other options are not right because a bankruptcy appears in the report for up to 10 years, a low debt to credit ratio shows that you use your credit in a responsible form and it won't hurt your credit acore. Also, if someone doesn't have a credit history, there is no score because there is no data to define that.