Lenders use which measure to decide whether to extend credit?

• A. Emergency preparedness
• B. Cost per wear
• C. Credit score
• D. Savings rate

Answer: (C)

Credit score is the key measure lenders use to decide whether to extend credit. This number summarizes your past behavior as a borrower—whether you’ve paid on time, how much you currently owe, how long you’ve had credit, any new credit accounts, and the mix of different types of credit. A higher score indicates lower risk of default, so lenders are more likely to approve your application and may offer better terms, while a lower score suggests higher risk and can lead to denial or higher interest rates.

Emergency preparedness, cost per wear, and savings rate don’t provide the same standardized signal about how reliably you’ll repay borrowed money. Emergency preparedness relates to planning for unexpected events but isn’t a formal predictor of loan repayment. Cost per wear is a fashion metric, not a credit metric. Savings rate shows how much you save, which can indicate financial discipline, but it isn’t a single, widely used underwriting standard like a credit score.