Econ 2 project

Econ 2 project - Score. These loans, however, are riskier...

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Marco Gonzalez Christopher Morales Econ 2 Project Q1. The FICO score is a person’s credit score or credit rating. Q2. A credit score is used for banks and lenders to determine a person’s eligibility to borrow m money. Q3. The government regulation requires lenders to not judge any borrower under superficial means such as race, color, sex, religion, etc. Q4. The determinants of an individual’s FICO score are the amount of debt an individual is in, punctuality of payments, length of credit history, and type of credit used. Q5. The range of FICO scores are between 300 and 850. The median FICO score is 723. Q6. A subprime mortgage loan is a loan that can be given to individuals with a low credit
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Unformatted text preview: Score. These loans, however, are riskier than other loans. Q7. FICO defines subprime mortgage borrowers as individuals with a credit score below 620. Q8. Out of 100 people, around 25 would be subprime mortgage borrowers. Q9. The subprime mortgage crisis occurred when many borrowers defaulted in their payments in a short period of time leading banks to drop the lenders credit score even further. Q10. The U.S. economy might be dragged into a recession by the subprime mortgage lenders because if there are more lenders not paying and foreclosures happen more quickly, then it will hurt the U.S. economy and perhaps lead to a recession....
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