4
QuizMultiple Choice

Credit Score — Quiz

Question 4 • Financial Algebra/Mathematics

How can high debt relative to credit limits affect a credit score?

Answer
A
negatively, by indicating potential financial distress
B
positively, if the debt is from student loans
C
no effect on a credit score
D
positively, by showing financial responsibility

Explanation

High debt compared with available credit means high credit utilization, which can lower a credit score. Lenders may view it as a sign that someone is relying heavily on credit and could be under financial strain. Therefore, the correct choice is “negatively, by indicating potential financial distress.”

AI-written and checked against the verified answer.

Previous
Next