Future Business Leaders of America (FBLA) Personal Finance Practice Test

On what grounds can credit not be denied to an individual?

1. You have a poor credit history

2. You are unemployed

3. You have a low income

4. You are a first-time borrower

The correct answer is: You are unemployed

When considering the denial of credit, one key principle is that an individual's employment status alone is not a sufficient basis for denial. Credit issuers evaluate multiple factors when assessing an application, including credit history, income level, and the individual's overall financial behavior. While being unemployed can raise concerns for lenders, it does not automatically disqualify someone from obtaining credit. Lenders may take into account other sources of income, savings, or financial assets when making a decision. Therefore, a lack of employment by itself cannot be used as a sole grounds for denying credit, making this option valid in the context of credit eligibility. In contrast, poor credit history, low income, and being a first-time borrower can significantly impact a person's likelihood of receiving credit, as these factors may indicate a higher risk to lenders. Poor credit history suggests past financial irresponsibility, low income may signify an inability to repay loans, and first-time borrowers can lack a proven track record.