Subprime lending

Subprime lending refers to the practice of extending loans to individuals with poor credit histories or limited creditworthiness. These borrowers typically have credit scores below the thresholds considered "prime," which is generally around 620 and above. As a result of their higher perceived risk, subprime loans often come with higher interest rates and less favorable terms compared to prime loans. Subprime lending is most commonly associated with mortgages, auto loans, and personal loans.