Sub-prime lending is a type of credit given to homeowners who do not meet the criteria for regular (?prime?) loans. A typical sub-prime borrower has a poor or limited credit history and a FICO score of less than 620. These factors make them a risky investment for regular lenders, which keeps them from taking out loans. To compensate for the risk, sub-prime lenders impose higher costs on their contracts. For credit cards, this is usually a higher fee for over-the-limit spending or late fees. Sub-prime mortgages usually have higher interest rates and stricter terms.
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Tags: Contracts, Credit Cards, Credit History, Fico Score, Interest Rates, Late Fees, Loan, Loan Modification, Modification, Prime, Prime Loans, Risk, Risky Investment, Sub Prime Lenders, Sub Prime Lending, Sub Prime Mortgages
