Ontario Mortgage Agent Practice Exam

What type of account is indicated by an R1 rating on a credit report?

1. Revolving account

2. Installment loan

3. Credit card account

4. Overdraft account

The correct answer is: Revolving account

An R1 rating on a credit report indicates a revolving account. This classification means that the account is considered to be in good standing, with payments made on time and no derogatory marks. The "R" in R1 refers specifically to revolving credit accounts such as credit cards or lines of credit. An R1 rating implies that the borrower has consistently met their repayment obligations. In this context, while an installment loan is a type of credit account that has fixed payments over a set period and generally receives a different rating (like an I for installment), it does not correlate with an R1 rating. Understanding R ratings is crucial for differentiating between types of credit and how they are viewed by lenders in terms of repayment reliability.