Credit histories allow firms to:
A) identify high-risk borrowers, so they can be eliminated and interest rates kept down for others.
B) increase the number of credit cards issued, and interest rates go up as a result.
C) increase the number of credit cards issued, and interest rates go down as a result.
D) lower the number of credit cards issued, and interest rates go up as a result.
E) increase market power in the credit card industry, raising interest rates.

Question

Quizplus · Accepted Answer

Credit histories are used by firms to identify high-risk borrowers and charge them higher interest rates or deny them credit altogether. This allows the firm to keep interest rates down for low-risk borrowers and minimize losses from default.

Credit Histories Allow Firms To