Logical ReasoningDifficulty: Hard

PT149 S1 Q19 Explanation

One of the things lenders do

A free, expert breakdown of this official LSAT Logical Reasoning question.

TopicsParadox

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Full official LSAT questions are available through LawHub. This page provides LSAT Lab's explanation, strategy, and review tools without republishing the full official question.

Stimulus

One of the things lenders do in evaluating the risk of a potential borrower defaulting on a loan is to consider the potential borrower’s credit score. In general, the higher the credit score, the less the risk of default. Yet for mortgage loans, the with the highest credit scores than for other borrowers.

What this question is testing

Paradox

Paradox

Normally, higher credit score = less default risk. Makes sense — credit scores measure how reliably people pay debts. But for mortgage loans specifically, the very top scorers default more than everyone else. That's the puzzle.

Evaluate

The credit score isn't suddenly broken — it still predicts well at lower score ranges and for non-mortgage loans. So something must be unique about high-score mortgage borrowers.

One natural possibility: lenders treat top-scoring mortgage applicants differently. If the credit score is so high that the lender just stamps "approved" without checking other risk factors (job stability, debt-to-income, savings), then any hidden risks fly under the radar. Those hidden risks then show up as defaults.

Goal

Find the answer that gives a reason top-scoring mortgage applicants get less scrutiny — letting hidden risks through.

Reading along? Open the full official question in LawHub — we show a fragment here and keep the reasoning in our own words.

The question
19.

Which one of the following, if true, most helps to resolve the apparent discrepancy in

Answer choices

  1. Correct69% picked this

    Mortgage lenders are much less likely to consider risk factors other than credit score when evaluating borrowers with

    Why this is right

    This explains the paradox. Mortgage lenders skip checking other risk factors for high-credit-score applicants. So those borrowers can have real risk factors (job instability, large debts, etc.) that go unexamined and unaddressed. Lower-credit-score applicants get all their risks scrutinized, so the loans they actually receive are filtered for those risks. Top-scorers, getting waved through, can have unflagged problems that lead to default. That's why the highest-score group defaults more than expected — the lender's screening process let through risks it would have caught for everyone else.

    Skill tested: Paradox · how this choice captures the argument's function is the move to repeat next time.

  2. No Impact9% picked this

    Credit scores reported to mortgage lenders are based on collections of data that sometimes include errors

    If credit scores sometimes contain errors, that affects all borrowers, not just the highest scorers. There's no reason this would specifically explain why top scorers default more than others. The puzzle is about what's different about top-score borrowers, and this is a general data-quality issue.

  3. No Impact5% picked this

    A potential borrower’s credit score is based in part on the potential borrower’s past history in paying off debts

    This is just a description of what goes into credit scores — historical debt repayment. It's background information about the metric, not an explanation of why top scorers behave differently on mortgages. Doesn't identify anything unique to top-scoring mortgage borrowers.

  4. No Impact16% picked this

    For most consumers, a mortgage is a much larger loan than any other loan

    If mortgages are large for everyone, that doesn't explain why top scorers default more than other mortgage borrowers — they're all dealing with the same large-loan dynamics. The fact applies equally across the score distribution.

  5. No Impact2% picked this

    Most potential borrowers have credit scores that are neither very low

    This describes the shape of the distribution — most borrowers are in the middle. That's a fact about how credit scores cluster, not an explanation of why people at the top default more. Distribution shape doesn't cause behavior.

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