Subprime lending is the practice of offering loans and lines of credit to borrowers with poor credit scores. Generally speaking, any credit score below 600 is considered less than favorable, and may make it difficult to get a loan product.
What Is Subprime Lending?
At some point, we all need financial help – whether it is to cover unexpected expenses or to make large purchases, such as buying a house or a car. Borrowing is a great option in those situations. However, traditional lenders aren’t always an option. Banks and credit unions offer better borrowing conditions for borrowers with good credit scores, and often, borrowers with subprime credit scores need to find an alternative.
Subprime lending is when loans are offered to borrowers with a credit score below 600. These loans will usually come with higher interest rates, due to the increased risk for the lender. Lenders offer several types of subprime options, including personal loans, auto loans, mortgages, credit cards, even business loans.
What Is a Credit Score?
Credit scores help lenders to assess your past payment history and determine your ability to handle any new debt you accumulate.
A credit score is the number used to represent this ability and FICO scoring is a method commonly used for calculating a credit score. Your FICO score comprises various elements such as payment history, total debt, the length of credit history, types of credit, and recent credit inquiries, and a numerical result can range between 300 and 850.
What Is a Subprime Credit Score?
Based on credit score, lenders categorize people into several categories:
- Exceptional – A score over 800.
- Very Good – A score between 740 and 800.
- Good – A score between 670 and 740.
- Fair – A score between 620 and 670.
- Subprime – A score between 550 and 620.
- Poor – A score lower than 550.
Your credit score determines how likely you are to be approved for a loan given by a traditional lender such as a bank or a credit union. Borrowers with higher credit scores can get better terms for their loans.
Borrowers with subprime credit scores, or FICO scores that fall between 550 and 620, may have trouble securing a loan from a traditional lender. CreditNinja offers personal loans with competitive rates and fair terms so borrowers with subprime credit scores can find a loan that meets their financial needs.
How Subprime Lending Works.
Many non-traditional lenders operating today offer subprime lending services. To apply for a loan with a subprime credit score, you need to meet basic age and income requirements, among other things.
The application process for subprime loans is easy, and you can either apply in-store or online, which is even more convenient. At CreditNinja, the approval process is quick, and you can get your money as soon as the next business day in most cases.
Benefits of Subprime Lending
Subprime lending comes with many advantages over traditional lending. Convenience is the main reason borrowers opt for non-traditional subprime lenders.
The application process for subprime loans is faster as compared to traditional loans. With traditional lending, the application process can last for days, or sometimes even weeks. Because of this, many borrowers choose non-traditional lenders, as subprime lenders can give a boost to the borrowers’ financial health.
Many subprime lenders have flexible terms, and you can switch your repayment plans if you have trouble following the initial schedule. With CreditNinja’s personal loans, you can contact our customer support, and find a repayment solution that can fit your budget.
If you are thinking about taking out a loan to help with your finances, CreditNinja can help you. Our personal loans come with flexible terms, competitive rates, and full transparency. The application process lasts only a few minutes. Start your application today and get your money as soon as the next business day.