Arizona Real Estate License Practice Exam 2026 – All-in-One Resource to Pass with Confidence!

A FICO score, which is a credit score developed by the Fair Isaac Corporation, is a key indicator of a borrower's creditworthiness. Lenders use this score to assess the likelihood that an applicant will repay their debts based on their credit history. A higher FICO score indicates a stronger credit profile, suggesting that the borrower is more likely to make timely payments on a loan.

When a lender reviews a borrower's FICO score, they are looking to determine if the borrower has sufficient credit to qualify for a loan. If the score meets or exceeds the lender’s threshold for risk, the borrower is considered creditworthy, which is crucial in the approval process for obtaining a mortgage or other types of credit. This evaluation helps lenders decide on loan terms, interest rates, and whether to approve the application.

The other options provided do not reflect what is determined from a FICO score. The type of loan (mortgage or deed of trust) and specific loan features (like caps for adjustable-rate loans or prepayment penalties) are not directly influenced by the borrower's FICO score but rather by the terms issued by the lender or regulatory requirements. Therefore, the primary purpose of the FICO score is to gauge sufficient creditworthiness rather than specific loan stipulations