Question

8. Normally, when using a credit scoring model receiving a zero on a variable such as income would:

1. Raise the result (Y) and makes getting credit more likely
2. Lowers the result (Y) and makes getting credit less likely
3. Has no impact (Y) on the credit scoring model

9. Trade Credit from suppliers is booked on the Balance Sheet as a (an):

1. Accounts payable
2. Notes payable
3. Short-term bank credit
4. All of the above

Answer 1

8. Income has no direct impact on the credit score. Credit score is based on the ability to repay debt. It's natural that a person with good or higher income would have a better debt repayment capacity. Income information is collected to understand the debt repaying capability of an individual. Credit score is mostly calculated from information like payment history, whether payments are made on time and all obligations are met. Hence the correct option is c.

9. Accounts payable is the money owed by the business to the suppliers. Trade credit from suppliers appears as accounts payable on the balance sheet. Short term bank credit appears under notes payable and these are short term borrowings by the business. Hence option a is the correct answer.