Question

Fair Isaacs Corporation (FICO) credit score is used to determine your creditworthiness. It is used to help determine whether you qualify for a mortgage or credit and is even used to determine insurance rates. FICO scores have a range of 300 to 850, with a higher score indicating a better credit history. The given data represent the interest rate (in percent) a bank would offer on a 36-month auto loan for various FICO scores.
Credit Score ..... Interest Rate (percent)
545 ........... 18.982
595 ............ 17.967
640 ............ 12.218
675 ............ 8.612
705 ............ 6.680
750 ............ 5.150
(a) Which variable do you believe is likely the explanatory variable and which is the response variable?
(b) Draw a scatter diagram of the data.
(c) Determine the linear correlation coefficient between FICO score and interest rate on a 36-month auto loan.
(d) Does a linear relation exist between the FICO score and interest rate?


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  • CreatedApril 27, 2015
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