Question

trish is having trouble understanding why she was not approved for her loan. which of the following probably kept trish from getting her loan?
a. trishs debt-to-income (dti) is currently 30%.
b. trishs credit score is 525.
c. trish is a single mom with three kids.
d. trishs gross monthly income is only $2,800.

Explanation:

Analyze the loan approval criteria for each option

• Option a: A debt-to-income (DTI) ratio of 30% is generally considered good and well within the acceptable limit for most lenders (typically up to 36% to 43%).
• Option b: A credit score of 525 is in the "Very Poor" range (typically 300 to 579). Lenders view this as a high risk, making loan approval highly unlikely.
• Option c: Marital status and number of children cannot legally be used as a basis for denying a loan under the Equal Credit Opportunity Act (ECOA).
• Option d: A gross monthly income of $2,800 is sufficient for many smaller or standard loans, provided the debt obligations are aligned.

Identify the primary reason for denial

A credit score of 525 is extremely low and serves as a primary, objective reason for automatic loan rejection by almost all traditional financial institutions.

Answer:

• a. Trish's debt-to-income (DTI) is currently 30%.
• b. Trish's credit score is 525. (Correct answer)
• c. Trish is a single mom with three kids.
• d. Trish's gross monthly income is only $2,800.