Logical Reasoning

PT149 · S1 · Q19 One of the things lenders do

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

  • Save & drill this skill — build targeted practice sets from questions like this one

  • Video walkthroughs — watch every question solved step by step

  • 81 official LSATs — as questions, timed sections & full-length tests

Start practicing free

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.

Given that ...

In general, borrowers with higher credit scores are less likely to default on their loan.

Why is it that ...

For mortgage loans, the highest-credit-score borrowers default more often than other borrowers?

Goal

We'll need some sort of distinction about mortgage loans that could explain why high credit scores are associated with not being able to make your mortgage payments. (Maybe people with high credit scores are able to buy houses they can't actually afford)

19.

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

  1. Correct

    Mortgage lenders are much less

    Why this is right

    This is saying that when someone has a high credit score, the mortgage lender essentially says, "ok, they're good to go". They don't tend to look at the other risk factors those borrowers might have. Those other risk factors are presumably the reason why these people with high credit scores aren't ultimately able to pay their mortgage and default. Meanwhile, when someone has a lower credit score, the mortgage lenders look more closely at other risk factors for that borrower, so they would be more likely to catch some "red flag", deny the loan, and thus never reach the stage of the borrower defaulting. In essence, this answer is saying, "people with low credit scores and additional red flags are not given the loan in the first place, so they don't have the option to default; people with high credit scores are given the loan (because the lender didn't research their red flags), and then the red flags ultimately are why the borrower ends up defaulting on their loan."

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

    70% picked this

  2. Credit scores reported to mortgage

    No Impact

    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.

    9% picked this

  3. A potential borrower’s credit score

    No Impact

    This answer also describes all borrowers for any type of loan. It doesn't offer any distinction about mortgage loans or about higher/lower credit scores, so it doesn't give us away to explain the surprise.

    4% picked this

  4. For most consumers, a mortgage

    No Impact

    This offers a distinction concerning mortgages vs. other types of loans. But in order for this to work, we would need to think that "people with higher credit scores are less likely to be able to pay back a large loan than are people with lower credit scores". That goes against common sense, since people with higher credit scores usually have more solid financial status.

    15% picked this

  5. Most potential borrowers have credit

    No Impact

    This answer doesn't offer any distinction about mortgage loans vs. other loans, or about higher vs. lower credit scores, so it doesn't give us away to explain the surprise.

    1% picked this

Continue the review in LSAT Lab

Save this question, watch the video walkthrough, and drill similar questions in your LSAT Lab account.

Save and practice this skill
LSAT Lab

Turn this review into a targeted study plan.

Save this question, drill more like it, watch the video walkthrough, and track your progress in your LSAT Lab account.

Start practicing free