What is the minimum credit score needed by a 35-year-old applicant to be considered for a mortgage in the following case? The credit score of 35-year-olds applying for a mortgage at a particular...
What is the minimum credit score needed by a 35-year-old applicant to be considered for a mortgage in the following case?
The credit score of 35-year-olds applying for a mortgage at a particular institution is normally distributed with a mean of 600 and a standard deviation of 100. A private lender only wants to give a mortgage to applicants with credit scores in the top 6%.
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The credit score of 35-year-old applicants for a mortgage at a particular institution is normally distributed with a mean of 600 and a standard deviation of 100. The lender only wants to give a mortgage to applicants with credit scores in the top 6%.
To determine what the minimum credit score a 35 year old would need to be eligible for a mortgage use a normal distribution table to find the z-score that corresponds to a probability of 94%
This is equal to 1.56
The eligible credit score is Z, where (Z - 600)/100 = 1.56
=> Z - 600 = 156
=> Z = 756
A 35 year old would need a minimum credit score of 756 to be eligible for a mortgage.
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calendarEducator since 2011
write2,998 answers
starTop subjects are Math, Science, and Business
Using a graphing utility or tables we find that the `z` score with 94% of the population beneath it is approximately 1.5548
Use `z=(x-mu)/sigma` to compute the required score.
`1.5548=(x-600)/100`
`x-600=155.48`
`x=755.48~~755.5`
So the lender will require a credit score `s>=755.5`
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