The childress family has applied for a dollar 5,000 loan for home improvements,

Question

The childress family has applied for a dollar 5,000 loan for home improvements, especially to install a new roof and add new carpeting. Bob Childress is a welder at For motor Co., the first year he has held that job, and his wife sells clothing at Wal-Mar They have three children. The Childresses own their home, which they purchase six months ago, and have an average credit rating, with some late bill payments. The have a telephone, but hold only a checking account with a bank and a few saving bonds. Mr. Childress has a dollar 35,000 life insurance policy with a cash surrender value of dollar 1,100. Suppose the lender uses the credit scoring system presented in this chapter and denies all credit applications scoring fewer than 360 points. Is the Childress family likely to get their loan? What is the family's credit score?

Explanation / Answer

Based on the information provided, the childress family falls short of the required credit score to be eligible for loan. Hence her request for loan would be denied.

Score Occupation Skilled or clerical workers 70 Housing Status Own 60 Credit Rating 50 Time in Job one year or less 20 Time at Current Address one year or less 10 Telephone years 20 Number of Dependents 3 40 Bank Accounts Held checking only 20 Total 290

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