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Why Do Lenders Avoid Lending Large Amounts of Money to One

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Essay

Why do lenders avoid lending large amounts of money to one borrower?


Definitions:

FICO Score

A score that summarizes the probability that a debtor will pay a debt and is a reliable way that creditors judge credit worthiness.

Interest

A fee paid on borrowed assets, usually calculated as a percentage of the principal.

Federal Direct Unsubsidized Loan

A federal student loan where the borrower is responsible for paying all the interest, regardless of the loan's status.

Interest Rate

The percentage of a sum of money charged for its use, often expressed annually.

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