Widespread use of credit scoring:
A) standardizes the perceived quality of different loan types.
B) decreases the supply of credit.
C) increases market interest rates.
D) reduces the costs of the associated loans.
E) all of the above.

Question

Quizplus · Accepted Answer

Widespread use of credit scoring standardizes the perceived quality of different loan types, making it easier for lenders to assess risk and set interest rates accordingly.

Answer: D 
 Credit scoring can reduce the costs of associated loans by allowing lenders to make more informed lending decisions and potentially offer lower interest rates to borrowers with higher credit scores.

Options B and C are not correct as they both suggest negative effects of credit scoring, whereas credit scoring is generally seen as a positive development in lending practices.

Widespread Use of Credit Scoring