International Baccalaureate (IB) Practice Exam

What is one advantage of maintaining a good credit score?

1. Increased insurance premiums.

2. Higher chances of loan approval.

3. Less access to credit options.

4. Lower interest rates only on credit cards.

The correct answer is: Higher chances of loan approval.

Maintaining a good credit score significantly increases the chances of loan approval. Lenders view a high credit score as an indication of a borrower’s reliability and willingness to repay borrowed funds on time. A strong credit history suggests that an individual has effectively managed credit in the past, which reduces the perceived risk for lenders. Consequently, when applying for loans, individuals with good credit scores are more likely to be approved, and they may also enjoy more favorable terms. In contrast, increased insurance premiums and less access to credit options would indicate a negative impact rather than an advantage of a good credit score. Similarly, while lower interest rates can be beneficial, they are not exclusive to credit cards and do not encapsulate the broader advantages related to overall loan approval chances and opportunities across various credit types.