One of Rachel's duties as a loan officer is to review the credit scores of loan applicants. The scores of several such applicants can be seen in the table below.
| Name | Experian | Equifax | Transunion |
| :----- | :------- | :------ | :--------- |
| Leslie | 775 | 803 | 675 |
| Pat | 668 | 821 | 774 |
| Sam | 706 | 720 | 732 |
| Alex | 739 | 816 | 799 |
Based on each applicant's median credit score, to which client is Rachel likely to offer the best interest rates?
a. Leslie
b. Pat
c. Sam
d. Alex
Answer (2)
Find the median credit score for each applicant.
Leslie: Median = 775, Pat: Median = 774, Sam: Median = 720, Alex: Median = 799.
Compare the median scores to determine who has the highest.
Alex has the highest median credit score, so Rachel is likely to offer the best interest rates to Alex: D .
Explanation
Understand the problem and provided data We are given a table of credit scores for four loan applicants from three different credit bureaus: Experian, Equifax, and Transunion. Our goal is to determine which applicant is likely to receive the best interest rates based on their median credit score. Generally, a higher credit score indicates lower risk, which translates to better interest rates.
Calculate the median credit score for each applicant To find the median credit score for each applicant, we need to arrange their three scores in ascending order and identify the middle value.
Find Leslie's median score For Leslie, the scores are 775, 803, and 675. Arranging them in ascending order gives us 675, 775, 803. The median is 775.
Find Pat's median score For Pat, the scores are 668, 821, and 774. Arranging them in ascending order gives us 668, 774, 821. The median is 774.
Find Sam's median score For Sam, the scores are 706, 720, and 732. Arranging them in ascending order gives us 706, 720, 732. The median is 720.
Find Alex's median score For Alex, the scores are 739, 816, and 799. Arranging them in ascending order gives us 739, 799, 816. The median is 799.
Compare the median scores Now, let's compare the median scores: Leslie (775), Pat (774), Sam (720), and Alex (799). The highest median score is 799, belonging to Alex.
Conclusion Therefore, Rachel is likely to offer the best interest rates to Alex because he has the highest median credit score among the applicants.
Examples
Credit scores are used in many real-life situations, such as when applying for a mortgage, a car loan, or even a credit card. Lenders use these scores to assess the risk of lending money to an individual. A higher credit score typically results in lower interest rates, saving the borrower money over the life of the loan. For example, if Alex, with a median credit score of 799, applies for a $200,000 mortgage, he might receive an interest rate of 3%, while Sam, with a median credit score of 720, might receive an interest rate of 4%. Over 30 years, this 1% difference could save Alex tens of thousands of dollars.
The best interest rates are likely to be offered to Alex, as he has the highest median credit score of 799 among the applicants analyzed. Leslie's median score is 775, Pat's is 774, and Sam's is 720. Therefore, the answer is d. Alex.
;
