Your FICO score makes a big difference in how lenders determine what interest rate to charge you.

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Your FICO score makes a big difference in how lenders determine what interest rate to charge you. Consider the situation faced by Edward and Jorge. Edward has a fairly poor FICO score of 660 and, as a result, pays 18.0% APR on the unpaid balance of his credit card. Jorge has a FICO score of 740 and pays only 7.3% APR on the unpaid balance of his credit card. If both persons carry an average balance of $3,000 on their credit cards for three years, how much more money will Edward repay compared with what Jorge owes (moral: you want a high FICO score)? Assume monthly of interest.
Compounding
Compounding is the process in which an asset's earnings, from either capital gains or interest, are reinvested to generate additional earnings over time. This growth, calculated using exponential functions, occurs because the investment will...

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For Edward the future worth of his account in 36 months will be 3000 FP 15 3...View the full answer

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Engineering Economy

ISBN: 978-0132554909

15th edition

Authors: William G. Sullivan, Elin M. Wicks, C. Patrick Koelling

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Question Posted: May 17, 2016 05:57 AM

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Your FICO score makes a big difference in how lenders determine what interest rate to charge you.

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For Edward the future worth of his account in 36 months will be 3000 FP 15 3...View the full answer

Engineering Economy

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