Question

Which borrower has the best credit?
A.
Carla
Gross income $45,000
30% debt-to-income ratio
490 credit score
Note: Has frequently defaulted on past loans.
B.
Michael
Gross income $30,000
30% debt-to-income ratio
770 credit score
Note: Has not defaulted on debt payments.
C.
John
Gross income $60,000
55% debt-to-income ratio
670 credit score
Note: Has missed 2 car payments in the past 6 months.

Answer 1

To determine which borrower has the best credit, we primarily focus on the credit score and the borrower's history of defaulting on loans.

Here's a breakdown of each borrower:

A. **Carla**
- Gross income: $45,000
- Debt-to-income ratio: 30%
- Credit score: 490
- Loan history: Frequently defaulted on past loans.

B. **Michael**
- Gross income: $30,000
- Debt-to-income ratio: 30%
- Credit score: 770
- Loan history: Has not defaulted on debt payments.

C. **John**
- Gross income: $60,000
- Debt-to-income ratio: 55%
- Credit score: 670
- Loan history: Missed 2 car payments in the past 6 months.

**Analysis:**
- **Carla** has the lowest credit score (490) and a history of frequently defaulting on loans, indicating poor creditworthiness.
- **Michael** has the highest credit score (770) and has a solid payment history with no defaults, indicating excellent creditworthiness.
- **John** has a decent credit score (670) but a high debt-to-income ratio (55%) and a recent history of missed payments, which negatively affects his creditworthiness.

**Conclusion:**
**Michael** is the borrower with the best credit, given his high credit score (770) and clean payment history.