Question

Which statement describes a risk of taking on debt? (1 point)

Responses

It allows you to buy things now and pay later.

It does not affect your credit score if you pay it off in a timely manner.

It could affect your ability to take out other loans.

It might result in the interest rates on other loans to increase.

explain which is correct

Answer 1

[AI-generated answer — Bot GPT 3.5]

The statement "It could affect your ability to take out other loans" is correct. Taking on debt increases your debt-to-income ratio, which can impact your creditworthiness and ability to qualify for future loans. Additionally, lenders may see you as a higher credit risk if you have a large amount of debt, potentially resulting in higher interest rates on any future loans.