What defines a subprime borrower?

A subprime borrower is defined primarily by having a poor credit history, which indicates a higher risk level when it comes to repaying loans. Subprime borrowers typically have credit scores that fall below the prime threshold set by lenders, which can result from factors such as missed payments, defaults, or a limited credit history. Consequently, this classification often makes it more difficult for them to secure loans, and when they do, they tend to face higher interest rates to compensate the lender for the increased risk.

In contrast, options that refer to someone with excellent credit history, stable income, or multiple investments do not align with the characteristics of a subprime borrower. Individuals in these latter categories are generally viewed as lower-risk by lenders and are more likely to obtain favorable loan terms.